Bitcoin is the name of a digital currency, while blockchain describes the underlying technology that tracks transactions within the system where the cryptocurrency exists. While Bitcoin payments still aren’t widely available, there are some online retailers that support Bitcoin purchases. Some brokerages also support cryptocurrency investments, as do some payment-processing companies, like PayPal. Like a regular bank ledger, this digital ledger records every transaction made with Bitcoin anywhere, including purchases, sales, trades and newly minted coins. To encourage people to commit the computing power necessary to validate the transactions, the completion of a calculation can earn you a reward – newly minted Bitcoin. While Bitcoin is increasingly viewed as a viable form of payment, people haven’t fully adopted it as such just yet. People may use the currency to diversify their portfolios, adding cryptocurrency to a mix of stocks, bonds and similar traditional options. Over time, more options may become available.
With the debit cards, you may be able to spend your Bitcoin like fiat currency. Again, that’s a security mechanism designed to prevent issues like fraud. Bitcoin is designed to work as an international electronic payment mechanism. One of its creator’s goals was to facilitate international transactions while avoiding the complexities of banking systems, currency exchanges and similar restrictive financial processes. Others are managed by Bitcoin exchanges or investment platforms. As a result, they treat it mostly as an investment opportunity. If it does, you can maintain the investment or sell it for fiat currency at a profit. Because Bitcoin is decentralized, meaning it isn’t controlled or overseen by a financial institution, anyone can potentially take an action that leads to new blocks. Every block is attached to the transaction before it to show where it came from, creating a chain of blocks – hence the name, blockchain. Whenever a new block is being added to the chain, a verification process initiates to ensure the block is valid.
In the simplest sense, every transaction is represented by a block. The issuing organization removes enough Bitcoin from your account to cover the transaction based on the current value of the coin. Instead, its value is based purely on public perception. Instead, it’s bought and sold directly to interested parties all around the world over online systems. That doesn’t mean you can’t spend Bitcoin outright if you own some; it’s just that this isn’t a widespread option yet. However, even if a company doesn’t directly accept Bitcoin, that doesn’t mean you’re entirely out of luck. If you’re asking questions like these, you’re in the right place. It only exists digitally, not physically, and it isn’t tied to a traditional banking system or fiat currency like the U.S. It also isn’t backed by any government or physical asset. You’re simply moving Bitcoin out of your wallet and into another, even if the checkout process doesn’t reflect that. But that doesn’t mean you don’t have questions about how this famed cryptocurrency works – and you definitely should if you’re thinking of purchasing some.
While Bitcoin and blockchain technology are tied together, the terms don’t refer to the same thing. While they don’t involve a bank, Bitcoin transactions do involve a transfer of assets. Even when you spend Bitcoin while checking out at a participating online retailer, the underlying transfer process remains the same. Typically, that process requires computers to solve complex mathematical equations. Typically, these include moving the Bitcoin from one owner’s digital wallet to another owner’s digital wallet. However, it also means that transactions aren’t typically reversible, even if you accidentally send Bitcoin to the wrong wallet or it’s stolen through a hack. These days, it’s probably safe to say that, like most people, you’ve at least heard of Bitcoin. Some are stored on private systems, like personal computers. In total, only 21 million Bitcoins are supposed to come into existence. Where does Bitcoin even come from, anyway? However, even with the limited choices available now, that gives most investors enough flexibility to ensure they can hold their investments or spend their Bitcoin with reasonable ease. However, blockchain also requires verification from other Bitcoin holders to become valid. Are Bitcoin and blockchain the same thing? This ensures that incoming transactions added to the ledger are legitimate.
