What is Blockchain & Bitcoin? A Brief Explanation

If you pay any attention to the financial sector, especially in relation to currency and investments, then you’ve undoubtedly been hearing a lot about cryptocurrency lately — specifically bitcoin and blockchain. Early this year, bitcoin prices rose by $500 in just 24 hours, causing a global wave of media attention in the ensuing months.

But what exactly is this newcomer to the financial world? Keep reading for a simple and concise explanation.

What is bitcoin?

Bitcoin is the first ever decentralized cryptocurrency. It was invented in 2008 by the pseudonym developer Satoshi Nakamoto and published as open source in 2009, but the true identity behind the invention of the bitcoin is still a mystery. Because of the high cost of bitcoin, users can use it in its smallest form as Satoshi (1/100000000) and mBTC (milli Bitcoin – 1/1000) instead of using the whole bitcoin all at once.

What is blockchain?

Blockchain technology plays a key role in the functioning of cryptocurrencies like bitcoin.

Blockchain is a decentralized digital public ledger used to store the transactions of cryptocurrencies. Blockchains can be further classified into three categorized based on the rules and conditions required to access it— namely:

  1. Public
  2. Private
  3. Consortium

Blockchain consists of “blocks,” which are encoded batches of transactions that are connected together in a chronological order or form.

The amount of time taken for another block to enter into the blockchain is known as “block time.” The block time for bitcoin is about 10 minutes.

The first ever international blockchain transaction was completed on October 24, 2016. It was brokered by the Commonwealth Bank of Australia and Wells Fargo & Co (WFC).

All transactions between users are confirmed within 10 minutes by the network using a process known as “mining.” All transactions generally take place through the crypto wallet.

Check out this insightful infographic below for further explanation about bitcoin, blockchain, cryptocurrency and more.

Infographic courtesy of bitcoinfy.net

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