Understanding The Difference Between Blockchain and Bitcoin


You must have read about the debate on blockchain vs bitcoin. Bitcoin has been in the news for years for both amazing and terrible reasons. Though many people don’t know how bitcoin works, everyone has their opinion on it. In this article, I will let you know the differences between the blockchain technology and bitcoin.

Blockchain and Bitcoin are not the same things. However, they are closely related. Getting straight to the point, blockchain is the underlying technology of bitcoin. Blockchain functions as a database for all the bitcoin transactions and maintains all the records right from the first transaction.

Blockchain was wrapped up together with bitcoin in the same solution when bitcoin was released as an open source code. And, since bitcoin was blockchain’s first application, people mistakenly used bitcoin to mean blockchain. This is how the misunderstanding began. Let us know in-detail about bitcoin and blockchain.

A blockchain is a distributed permissionless database based on blockchain protocol that runs a continuously expanding catalogue of transactional data records hardened against revision and tampering, even by the data store nodes’ operations. The blockchain technology’s well-known and initial application is the public ledger of transactions for bitcoin and altchains(the inspiration of similarly distributed ledgers). Every blockchain record is cryptographically enforced and hosted on machines functioning in the form of data store nodes.

Bitcoin is a payment system and a digital asset and was released as an open source software in 2009. The system is peer-to-peer, that is, the users are able to transact directly without the need for an intermediary such as a bank, a clearinghouse, or a credit card company. The network nodes verify the bitcoin transactions and these transactions are recorded in a public distributed ledger referred to as blockchain.

The Difference between Blockchain vs Bitcoin

As we explore the technology behind blockchain, it is important to understand what role bitcoin plays. As explained earlier, bitcoin is a digital currency launched in 2009 with the intention of simplifying online transactions by bypassing government control of currency.

It does this by storing and transacting the currency over a peer-to-peer network, a blockchain rather than using a central monetary repository. It is important to make the distinction that bitcoin is not a blockchain itself. Bitcoin is transacted over an open public anonymous blockchain network. In many ways, you can think of blockchain as the operating system and bitcoin is one of the many applications that run on that system.

The blockchain that underlies bitcoin has some fundamental similarities but also key differences to a blockchain built for business such as the Linux Foundation’s Hyperledger Fabric. To gain insights into the difference between bitcoin and blockchain, let’s understand the fundamental similarities and differences between a bitcoin blockchain and a blockchain built for business.

Both are cost effective as they increase the speed of transactions and reduce overhead costs. Both are highly efficient as the transaction is recorded once and is then visible to all parties through the distributed network. Both are tampering evident. The transaction cannot be modified. It can only be reversed with another transaction. Both the transactions are visible in this case.

However, a bitcoin blockchain is limited in a few ways. It is primarily designed to transact cryptocurrency and is also open and public, meaning anyone can join and view every transaction that has ever happened on the network. It is anonymous, meaning it is nearly impossible to know the identity of who is involved in a transaction. Because of this, it requires heavyweight cryptography to deter fraudulent activity which requires significant computing power.

These characteristics lead to many issues around efficiency, confidentiality, security, and trust when conducting business, especially in regulated industries.

On the other hand, a blockchain built for business enables you to exchange anything of value whether tangible like a car or house, or intangible like a patent or copyright or digital like videos or photos. It is private, so the invited members know exactly who they are doing business with. It is permission, so the participants are only given access to data relevant to them and it runs on smart contracts, business logic embedded into the network reducing disputes and increasing trust.

The blockchain for business also utilizes selective endorsement which allows participants to control exactly who verifies transactions. Thus, from this section, you have obtained detailed information about the difference between a blockchain and a bitcoin.


Since there isn’t any official definition for blockchain, there are various network technologies that claim its name. From the above sections, it is evident that bitcoin refers to the currency token that is present on the blockchain network and there are various other networks that utilize a blockchain of some type or the other. Though the financial sector and technology companies consider the blockchain technology as a revolution, they still have to utilize bitcoin. The blockchain and bitcoin compliment each other as components of a greater system.

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