Bitcoin technology
Bitcoin is a that was introduced in 2009 as a form of digital means of transaction. It comprises an array of mathematical problems that are solved by users on the bitcoin network. The process of solving these mathematical problems is known as mining and is done by individuals known as miners. It is the form of making transactions that are solely decentralized. This means that it is not under the control of the government or the bank.
Therefore while making or receiving payments the users are saved the hassle of getting the approval of a third party or organization. Also, this mode of making transactions gives its users the benefit of remaining fairly anonymous. This is because unlike fiat currency, which is the currency issued by the government, payments made using bitcoins are difficult to trace back to the user.
However, it is important to know that since no other organization is in control of your funds, it is the user’s responsibility to keep their funds secure. They can do this by transferring and saving their bitcoins in the digital wallet. You can access and easily download this app on your computers and smartphones.
Blockchain technology
The blockchain is a ledger that is accessible to the public and is accountable for keeping a record of all the transactions that are being made using the bitcoin network. This database is available to the public and all the bitcoin users who can easily download a copy of this ledger. The blockchain can be used to inspect the transactions that are being made and how is being circulated from one end to another. Although, using the blockchain one can trace the circulation of the bitcoins every time a transaction is made, however, this downloadable form of the bitcoin ledger will not reveal the personal identities of the users making the transactions.
This is one of the main advantages of the bitcoin technology as the users making the payments can remain anonymous as tracing the user in this chain of transactions is fairly a difficult process. Therefore the blockchain will not reveal the users making the transactions. Instead, it is merely a record of the transactions being made and how bitcoins are being transferred from one user to another.
The blockchain keeps a record of all the transactions being made in the form of blocks that are then linked to each other in the form of a chain, hence the terminology blockchain.
What is a block?
A block is basically a record of a particular set of transactions that were made using bitcoins. Based on the countless transactions being performed each day, blocks recording such transactions are kept chained to each other in the form of a blockchain. These blocks are created by users on the bitcoin network known as the miners. These miners are made to solve a complex mathematical problem, after the success of which the miners are able to create a new block. Miners are given time duration of 10 minutes in which they have to solve the problem. The time duration is subject to changes depending on the difficulty level of the problems being issued and the numbers of miners at work on the network.
Thus, the more miners working on the network, the greater the difficulty level of the mathematical problems issued as compared to when there are fewer miners available. After successfully creating a new block, the miners are rewarded with a set of bitcoins which gives them the incentive to further keep the blockchain updated. By recording all the transactions being made on this network, the miners help to keep this network secure and free of any invalid or fraudulent activities.
So every time a new bitcoin transaction is being finalized, a new block is in the process of being published too. However, the block will not be published if the transaction made has been labeled invalid. It takes a close inspection from a minimum of three networks to confirm the transaction as valid before the block for that transaction can be published.
Conclusion
Although it has been stressed that the bitcoin is reserved for the record of transactions taking place on the bitcoin network, the blockchain technology is not only used for this sole purpose.
Blockchain technology is massively used to store data in the field of banking and finance, supply chains, healthcare, property record, and smart contracts.