Digital Marketing

What is Blockchain and How Does it Work?

The global competition is stiff. That is why businesses are seeking new ways to address what is blockchain and how it can further streamline digital currencies and various industry operations.

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About Blockchain Technology

Known as a system of recorded transactions made with cryptocurrency, blockchain refers to data (in the form of blocks) linked together with cryptography. It allows permanent and secure data storage that is circulated through several nodes.

Blockchain technology was originally created in 1991 by a group of researchers as time stamp for digital documents to prevent tampering or backdating. However, blockchain become was not used until the year 2009, when Satoshi Nakamoto introduced the Bitcoin network to the world.

Blockchain vs. Bitcoin: Are they the same?

Many people commonly confuse blockchain technology with Bitcoin network. However, this is far from the case. The Bitcoin network pertains to cryptocurrency while blockchain acts as the underlying technology that powers most of its applications.

Here’s how they differ:

  • Goal

Bitcoin aims to simplify and speed up digital currency transactions. Blockchain, on the other hand, aims to provide a safe, secure, and low-cost platform for network transactions.

  • Trade Process

Blockchain facilitates not only the transfer of cryptocurrencies, but also digital assets.  Bitcoin, on the other hand, is limited to cryptocurrency trading.

  • Scope

Bitcoins are deflationary, which means that they are finite. Once all 21,000,000 bitcoins are mined, the cryptocurrency will be tapped out, unless its protocol will be changed to allow a larger supply.

As for Blockchain, its limit is more open to protocol changes, hence the support it has by many blockchain technology companies.

  • Strategy

Many companies from various industries are able to use the blockchain technology to their advantage due to its flexibility. It can be applied in SEO, banking, parking management services, among others. In the case of Bitcoin, its sole strategy is to lower the cost of influencers and lessen the time it takes to handle transactions online.

How does blockchain work?

The blockchain is a collection of blocks linked together. It has three primary components:

  • The Data

The data stored in the block depends on the type of information it holds. For instance, if Bitcoin transactions were made, then a bitcoin blockchain would be formed. If digital assets were stored and distributed, then a digital asset blockchain would be the result.

  • The Hash

This converts letters and numbers into an encrypted code. It’s created by an algorithm, which is essential for bitcoin mining.

  • The Block

For the mining process to proceed, data from previous blocks is used to create a chain of blocks and form the technology.

Use Blockchain Technology to Your Advantage!

Learn more about Blockchain and bitcoin to make smarter investments and business transactions! Visit the top cryptocurrency websites today to stay up-to-date with the latest news and developments about blockchain technology.