Read an important announcement about Bitcoin from Bitcoin.com.
Before delving into the difference between the Bitcoin blockchain and banking ledgers, let’s first understand what the blockchain is. To put it as simply as possible, the blockchain is a public immutable and decentralized global ledger powered by Bitcoin.
In the blockchain, transactions are part of blocks. Each block refers to a previous block adding to previous proofs-of-work, which forms a chain of blocks. Once a chain is formed, it confirms all previous bitcoin transactions and secures the network. This not only helps solve the double-spending problem, but it opens the doors for a myriad of powerful applications.
Banks for many years have also used ledgers to track and manage financial transactions, however, bank ledgers are historically private and closed. The general public cannot view them, doesn’t have access to them, and they are centrally managed by the financial institutions; essentially they are permissioned ledgers where banks oversee them with impunity.
The difference between the two is that the Bitcoin blockchain is completely decentralized and open source. This means that people do not have to rely on or trust the central bank to keep track of the transactions. The peer-to-peer blockchain technology can keep track of all the transactions without the fear of having them erased, lost or even seized. The blockchain is permission-less, anyone can participate around the world.
Furthermore, the blockchain, because of its open source nature, is more versatile and programmable than central banking ledgers. If programmers need new functionality on the blockchain, they can simply innovate on top of already existing software through consensus. This is difficult for central banks because of all of their regulations and central points of failure.
Want to learn more about Bitcoin and the blockchain? Head on over to our Getting Started page which has a myriad of helpful articles and information to get you going.