Are blockchain, cryptocurrency, and bitcoin the same thing?

At HeraSoft, we deal with enterprise and enterprise security applications of blockchain technology. Because blockchain is a new technology, we often find ourselves doing a little “blockchain technology for dummies” explainer before we get to a conversation about blockchain-powered business and enterprise security solutions. With crypto back in the news, we thought we’d address one of the more common questions we hear:

Are blockchain, bitcoin, and cryptocurrency the same thing? The short answer is, no. According to Gartner, “it’s important to not conflate the value of blockchain with the most recent price of various coins…” We agree, so here’s our take on unpacking the difference between blockchain, cryptocurrency, and bitcoin:

Understanding blockchain technology 

Put simply, blockchain is a type of database. In fact, all blockchains are databases — though not all blockchains are cryptocurrencies.

There are different types of databases, but, generally speaking, they are all ways of storing information on a computer system. Most databases store tabular data because this way of organizing information is easy to search and filter. Consider a spreadsheet: this digital table allows one person or a small group of people to create, store, and access a limited amount of data. Spreadsheets don’t scale well for enterprises; servers offer a level up.

Servers house large databases of tabular data in a way that many thousands of users can access, sometimes simultaneously. This incredible innovation, made more powerful through cloud computing, allows businesses to power more transactions for larger groups of people over longer distances. In the case of the cloud, businesses can even avoid the capital investment required to acquire and maintain large server farms. Regardless of whether a database is local or in the cloud, an individual, department, or vendor controls access (which introduces some security challenges).

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Blockchain databases are distinct from server databases in two ways: 1) blockchain stores data in chunks — or blocks; 2) blockchain technology is easily decentralized. Let’s tackle each of these features separately.

Blockchains group information together into sets or blocks, each of which have a given storage capacity. When blocks fill up, a new block forms that gets “chained” to the previous one. Information compiled in this way naturally forms a timeline. A decentralized blockchain timeline is immutable, which is to say that the system is inherently irreversible so changes must be amended by permission and logged within the same blockchain, but the ledger will still have a record of the original transaction.

What does decentralized mean? Decentralization in blockchain refers not only to the physical distribution of the blocks in the chain but also to the distribution of decision making. With a distributed database, the data is accessible through a variety of servers. With a decentralized blockchain, not only is the database distributed, access permissions and incentivization structures are distributed across the ecosystem as well. Different blockchains are constructed in different ways, so a given ecosystem, organization, or business can define or select how some of these features are implemented.

Cryptocurrency or “crypto” is a type of blockchain. Different cryptocurrencies have different features and advantages, but all have in common the fact that they are digital assets that also can serve as mediums of exchange. Ownership of a particular token or tokens and the history of exchanges are stored in the cryptocurrencies’ blockchain ledgers.

Bitcoin is a type of blockchain cryptocurrency whose success helped propel the critical elements of blockchain technology into other areas of life and business. Bitcoin has features that make it distinct, one of which is that it is the most popular and traded cryptocurrency. Bitcoin does not, however, have an enterprise blockchain application beyond, perhaps, holding Bitcoin in corporate treasury or accepting it as a means of exchange.

In short, blockchain is a technology and cryptocurrency merely an application — albeit a critical one. Other applications of blockchain technology include secure ledgers of critical transactions or access, implementation of the cryptographic features of blockchain within a distributed database, smart contracts, and more.

Learn more about how we can help

HeraSoft’s next generation software offers a variety of products and services to improve enterprise cybersecurity.

 

• HeraVault™ offers distributed cloud storage with built-in replication, error correction and restoration capabilities.
• HeraFlow™, is an AI-Powered threat analysis system for fast and accurate threat data monitoring perfect for high-volume workloads and enterprise-level SOC’s.
• HeraPass™, with inherently fraud proof design, helps businesses innovate user management in IoT environments by achieving the anonymization and encryption of highly-sensitive data.
• HeraStamp™ proof-stamps mission critical data to permanent data stores and can help with data integrity in, for example, ecommerce settings.

To learn more about our enterprise blockchain solutions and how we can help, click here.