The concept of blockchain has been gaining tremendous popularity, and Bitcoin's price has been on the rise. This has led many people to ask: Is blockchain the same as Bitcoin? What makes blockchain secure? And what sets it apart? This article will address these questions one by one.
As the new year began, the blockchain was not only a hot topic in discussions but also a major focus for investors. Blockchain-related stocks experienced wild fluctuations, while the Shanghai and Shenzhen Stock Exchanges issued announcements and clarifications from major companies. The blockchain is definitely on the move. However, despite the buzz, few truly understand what blockchain actually is.
Is the blockchain the same as Bitcoin?
Blockchain became widely known through Bitcoin and the ICOs that were recently regulated and shut down. As the underlying technology behind Bitcoin and various "tokens," many people mistakenly think that blockchain is just Bitcoin. In reality, this is a misunderstanding. Industry experts emphasize that it's important to distinguish between virtual currencies like Bitcoin and blockchain technology itself. Shutting down virtual currency exchanges and banning Bitcoin trading should not be seen as a rejection of blockchain development.
Dong Xiwei, a senior researcher at the Chongyang Institute for Financial Studies at Renmin University, pointed out that it's crucial to differentiate between banned ICOs and Bitcoin itself. He also stressed that regulatory actions are not aimed at suppressing blockchain technology, but rather at curbing illegal fundraising activities to maintain financial order and protect public interest.
In June of this year, a ransomware attack hit Europe again, with some government officials being asked to pay ransoms in Bitcoin.
Is the essence of blockchain a database technology?
After clearing up these misconceptions, let’s explore what blockchain really is. Wang Wei, chief researcher at the Tencent Financial Technology Think Tank, explained that the core of blockchain is a type of database technology—specifically, a ledger-based system. A ledger records changes in asset holdings and transactions, and it is essentially the simplest form of a database. For example, the small books we use to track expenses or bank statements are typical examples of ledgers.
Hu Danqing, a senior product expert at Ant Financial Blockchain, added that blockchain functions as a distributed ledger involving multiple parties. It is often referred to as “the technology that solves trust issues.†The key difference between the digital world and the physical world lies in the fact that physical objects exist and cannot be created or destroyed without evidence. However, digital data can be altered, deleted, or copied without leaving a trace. Blockchain helps make the digital world as trustworthy as the physical one.
What makes blockchain secure?
So, how does blockchain differ from traditional databases, and what are its unique features?
Wang Wei explained that blockchain is a distributed database technology. The term “distributed†refers to the storage architecture. Unlike traditional systems, blockchain stores the entire ledger on every node, ensuring high security because no single entity can destroy all nodes simultaneously.
Second, blockchain achieves tamper resistance through its structure of “blocks†and “chains.†Each block contains a unique identifier (or “hashâ€) of the previous block, creating a chain-like sequence. Any attempt to alter a block would break the chain, making it easily detectable.
The 2nd China Blockchain Technology Innovation Application Competition Awards Ceremony.
How does blockchain prevent tampering?
If someone alters the content of a block, the hash of that block will change, causing the subsequent blocks to no longer recognize it. This creates a broken chain, which is immediately noticeable.
Wang Wei added that most traditional databases are centralized, meaning users must trust a central authority to record their transactions accurately. In contrast, blockchain is decentralized and relies on an open, transparent consensus algorithm. Any transaction that meets the agreed-upon rules can be recorded, and everyone follows the same set of guidelines.
While blockchain offers strong security, it also emphasizes openness and transparency. Since any node can participate in the network, it may not be suitable for scenarios requiring strict data privacy protection.
Where can blockchain be applied?
Sun Guofeng, director of the People's Bank of China Financial Research Institute, stated in an interview that blockchain technology has a wide range of applications, including social management scenarios. He encouraged further research and development to expand its potential uses.
Zhongxin.com notes that many enterprises have already started applying blockchain in public welfare to increase transparency and ensure that donations are traceable and non-tamperable. Additionally, blockchain is used for product authenticity tracking and enhancing trust in real estate platforms.
Chongqing City Blockchain Industry Innovation Base Unveiled
Some companies have also introduced shared ledgers to improve information sharing, such as in public welfare search and reporting lost children across multiple platforms within a network.
“Using blockchain to solve trust issues holds great value in modern business society,†said Wang Wei. To determine if a scenario is suitable for blockchain, he suggested asking four questions: Is there a high demand for data security? Is there a fully trusted organization? Is the need for data processing efficiency low? And is data privacy not a major concern? If the answers are yes, then the scenario is ideal for blockchain application.
How should we rationally view the blockchain boom?
In response to the current blockchain hype, Hu Danqing noted that much of the excitement is not about solving trust problems through technology, but rather about fundraising and speculation. Most so-called ICOs are merely tools for raising capital, not true technological innovations.
“The key to determining whether something is a technological innovation or a fundraising gimmick is clear: Does it start with trust and create real value by solving trust issues? Without a real value foundation, coins with high market value are just bubbles waiting to burst,†Hu Danqing said.
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