A few years ago, most people probably thought that “cryptocurrency” referred to the money you have on online video games like Runescape and Club Penguin.
But nowadays, almost 8% of Americans own some kind of cryptocurrency. And of the over 90% who don’t, 8% of them plans to in the near future.
But that leaves a good amount of people who still aren’t messing around with cryptocurrency. And surveys say that many people don’t deal with cryptocurrency because it’s too hard to use and they don’t understand it.
If that sounds like you, you’ve come to the right place. We’re going to go over 2 of the most common terms used in cryptocurrency: blockchain and bitcoin. If you’re lost on the blockchain vs bitcoin topic, keep reading to learn more.
What Is Bitcoin?
Bitcoin is the world’s most popular cryptocurrency. It’s often referred to as the first true form of decentralized electronic currency in the world.
Basically, it’s an electronic form of money. Right now, 1 bitcoin is equal to just about 5,500 American dollars.
It’s a decentralized form of currency. This means there isn’t one central authority controlling the currency like traditional forms of money. It’s run entirely electronically with peer-to-peer networks and transfers.
How is this network set up, then? Well, that’s where blockchain comes in.
What Is Blockchain?
Blockchain is essentially the cryptocurrency ledger. It tracks:
- Cryptocurrency trades
It records every single cryptocurrency transaction ever made. Each transaction makes up one “block” in the chain of transactions (you can see where the name comes from now).
Blockchain is an important technology for cryptocurrencies because it prevents fraud, faulty encryptions, and file corruption from disrupting the ledger. This protects the cryptocurrency’s reliability, reputation, and users.
Blockchain technology also controls the creation of new cryptocurrency, where new cryptocurrency appears, and keeps these transactions/creations accurate.
The Bitcoin-Blockchain Connection
Blockchain technology can be used with any cryptocurrency. The confusion of bitcoin vs blockchain is that many people refer to bitcoin blockchain interchangeably with the general term “blockchain.”
The true connection between the two is that blockchain is how bitcoin transactions and creations are kept track of. The decentralized bitcoin market is controlled and organized by blockchain technology.
Simply put: blockchain organizes and creates the bitcoin ledger. However, blockchain technology isn’t limited to the bitcoin cryptocurrency.
Blockchain vs Bitcoin: Final Thoughts
While the details of blockchain vs bitcoin might be confusing, it’s helpful to think of them in analogies. If bitcoin is like our regular dollars, then blockchain is like a traditional bank that keeps track of it all.
And despite all of the conflicting information you might’ve heard in the news, bitcoin and other cryptocurrencies are still an excellent investment. If you’re smart about it, you can make some serious money via cryptocurrency.
Still confused about certain crypto and finance terms? Check out our other financial articles that go over some of the basics of investing, cryptocurrency, and more.