Bitcoin is not the same as a blockchain although they are closely associated with one another. Bitcoin is the blockchain’s first application and the blockchain technology continues to be used by other industries, besides the crypto world. The Bitcoin is essentially an unregulated digital currency created in 2008 by Satoshi Nakamoto.
The idea behind the Bitcoin was to bypass governmental controls on currency and streamline online monetary transfers. This was going to be possible by eliminating third party intermediaries like the banks. But, there had to be a secure platform for making cryptocurrency transactions. This is why the distributed ledger technology or DLT was used on a P2P or peer-to-peer network that is anonymous and open.
The Bitcoin is the distributed ledger blockchain where there is a ledger/database comprising of transaction records. This ledger is present on a P2P platform without any central authority, and network participants have to agree on validity of transactions so that they can be verified and recorded. The agreement is referred to as “consensus” and this can be achieved through “mining”. Miners have to perform complex cryptographic calculations to verify the legitimacy of transactions.
A “proof of work” is created when certain criteria are met. This refers to data that is time-consuming and costly to generate but which may be verified easily by others. Every record needs to have proof of work in order to state theta consensus has been achieved. Accordingly transaction records will not get tampered or edited once these have been added to the blockchain.
Bitcoin is a type of blockchain technology because Bitcoins are now owned by any one entity and therefore decentralized, data is stored inside cryptographically, and the blockchain remains immutable. This implies that records once verified cannot be changed and the blockchain is transparent so everyone can view or track data. Visit https://www.bitcoinsuperstar.io/ to learn how bitcoin can be traded using automated trading bots. The automated trading bots are trending now in bitcoin market.
Earlier, most data was centralized but that made it vulnerable to hacking. However in a decentralized system the data is not stored in one entity; rather, every participant in the blockchain will own the information. Here, it is possible to interact with another participant without involving a middleman or third party.
As far as transparency goes, Bitcoin has a blockchain which hides the individual sender or recipient’s address but shows only their public address. So, individual identity stays secure but you can view the amount in transactions. Such transparency was hitherto unheard of in traditional financial systems. It provides that additional level of accountability that is much needed.
Finally, Bitcoin’s blockchain is immutable and this means once data has been entered; it cannot be tampered by anyone. This is made possible because of cryptographic hash functions. In Bitcoins, transactions are inputs and these are then run through SHA-256 or Bitcoin’s hashing algorithm to give an output. Even if a hacker can attack a block and attempts to change data, even the slightest change will alter the hash dramatically and this will automatically change the hash in the block next to it and so on and so forth. This will completely change the chain and that is not practically possible; as a result, the Bitcoin blockchain can maintain its immutability.
