Over the past ten years, Bitcoin has started a financial revolution, and at its core is an amazing technology called blockchain. While many people often confuse Bitcoin with blockchain, they’re not the same, but they are closely related. If you’re interested in learning about how digital currencies operate, how secure decentralized systems work, and how these exciting innovations are transforming various industries, this blog is the perfect place for you.
Table of Contents
What is Bitcoin Blockchain?
Before we try to understand how bitcoin and blockchain are related, we must be adept with the precepts of bitcoins. We must also understand what role blockchain plays in the world of bitcoins.
If you say that bitcoin is a cryptocurrency, you are correct. It is a form of electronic cash that functions just as general currency units. BUT there is much more to dwell on bitcoins.
Bitcoin is basically a digital currency that was created in the year 2009. With a promise of lower transaction fees than traditional online payment mechanisms unlike government-issued currencies, bitcoin has emerged as a popular trend in recent years. Bitcoins do not exist physically; rather, they are maintained as balances on a public ledger in the cloud, which are verified by a massive amount of computing power. Despite not being a legal tender, bitcoin is quite high in popularity, and in due course of time, it has stimulated the launch of other virtual currencies collectively referred to as Altcoins.
PS: According to the official Bitcoin Foundation, the word “Bitcoin” is capitalized in the context of referring to the entity or concept, whereas “bitcoin” is written in the lower case when referring to a quantity of the currency or as units.
Are Blockchain and Bitcoin the Same?
No. They are not. Bitcoins are simply online currencies or cryptocurrencies, while blockchain is the technology that is leveraged to manage bitcoins. Bitcoin was launched to bypass government currency controls and simplify online transactions by getting rid of third-party payment processing subsidiaries. Bitcoin transactions are stored and transferred using a distributed ledger on a peer-to-peer network that is open, public, and anonymous. The technology that maintains the Bitcoin transaction ledger is Blockchain.
How Does the Bitcoin Blockchain Work?
In simple terms, the Bitcoin blockchain is a ledger that is comprised of Bitcoin transaction records. This ledger is distributed across a peer-to-peer network and is without a central authority. Therefore, network participants must agree on the validity of transactions before they can be recorded. Known as consensus, this agreement is achieved through a process called bitcoin mining.
After an individual uses Bitcoins, bitcoin miners engage in sophisticated and resource-intensive computational equations to verify the legitimacy and authenticity of those transactions. Through the whole process, Proof of Work that meets certain requisites is developed.
A piece of data that is both costly and time-consuming to produce, Proof of Work can, however, be easily verified by others. To be considered a valid transaction on the blockchain, an individual record must have Proof of Work to prove that a consensus was achieved before it got added to the blockchain. By this design, transaction records cannot be tampered with or manipulated post added to the blockchain.
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Bitcoin Blockchain Size
As of 2025, the Bitcoin blockchain has grown to over 500 GB in size. On average, it increases by about 144 MB per day, since a new block (roughly 1 MB in size) is added approximately every 10 minutes. If the Bitcoin network were to process the same transaction volume as Visa (thousands per second), the blockchain’s size could potentially scale at a significantly faster rate, presenting scalability challenges.
Does Blockchain Technology Only Work with Bitcoin?
The blockchain that supports Bitcoin was developed specifically for cryptocurrency. That is the main reason for why it took a while for people to realize that blockchain technology could also be adapted for use in other areas. The technology also had to be modified substantially to meet the rigorous standards that today’s businesses demand.
Three main characteristics distinguish the Bitcoin blockchain from a blockchain that is designed for a business. They are:
- Assets over cryptocurrency: Blockchains can be used for a much broader range of assets in disparate verticals rather than just cryptocurrency.
- Identity over anonymity: While blockchain bitcoin thrives due to unmatched anonymity, businesses have KYC and AML compliances. Blockchains for businesses consider these regulations and abide by them. They are designed keeping in mind the emerging compliance guidelines.
- Selective endorsement over Proof of Work: Consensus in a blockchain for a business is not achieved through mining but by a process which is referred to as ‘selective endorsement.’ With selective endorsements, businesses can control who exactly is verifying transactions. For instance, if we transfer money to a third party, then our bank, the recipient’s bank, and a payment provider would verify the transaction.
How Can Bitcoins Help Ordinary Users Like You and Me?
With bitcoins, no individual or bank is maintaining our transaction ledger. The ledger is available to everyone, and transactions are linked to our Bitcoin address. This makes our transactions and money really secure as there is no centralized control.
Additionally, unlike normal transactions where there is a need for us to punch in our personal details and credentials, the only thing we need to mention while transacting bitcoins is our Bitcoin wallet address. This ensures anonymity and safe online transactions.
Most importantly, when we make a Bitcoin transaction, our Bitcoin software signs the transaction with our private key. This cryptographic signature is the mathematical mechanism that allows someone to prove their ownership. Secure, fascinating, and alluring, Bitcoins are the best form of online transactions that we can look up to in this world where piracy and hacks have become as rampant as human beings.
Scalability Solutions: The Lightning Network
The main blockchain of Bitcoin can only process about seven transactions per second, which has long been a problem. This is addressed by the Lightning Network, a second-layer solution that permits off-chain transactions, greatly boosts throughput, and lowers fees.
The Lightning Network has the theoretical capacity to handle up to 1 million transactions per second, far exceeding traditional payment systems such as Visa. It is perfect for everyday use and microtransactions because transactions are almost instantaneous and incur few fees.
Bitcoin’s usability is enhanced and its acceptance as a practical payment method is encouraged by the Lightning Network, which makes transactions faster and more affordable.
Bitcoin’s Environmental Impact
Bitcoin mining consumes an immense amount of electricity, with usage in 2022 reaching approximately 173.42 TWh, surpassing the annual energy consumption of countries like Argentina and the Philippines. This contributed to roughly 85.89 million metric tons of CO₂ emissions, comparable to the output of burning 84 billion pounds of coal.
Beyond energy use, mining also generates substantial electronic waste due to the limited lifespan of specialized hardware. An estimated 30.7 kilotons of e-waste are produced annually, equivalent to the amount generated by an entire nation’s small IT equipment.
Major Concerns
- The demand for energy is comparable to that of mid-sized nations.
- The effects of climate change are being accelerated by significant carbon emissions.
- Hardware that is short-lived and causes more e-waste
Steps Toward Sustainability
- Switching to more energy-efficient mining equipment
- Changing to renewable energy sources, such as hydro and solar
- To better utilise surplus energy, heat recovery systems should be installed.
Conclusion
The Bitcoin blockchain is a new combination of technology and finance that allows safe and decentralized transactions without middlemen. While it’s become popular worldwide, it’s important to know its pros and cons. The mining process uses a lot of energy, but solutions like the Lightning Network and greener mining practices are being developed. As blockchain grows beyond just cryptocurrency into areas like healthcare and supply chain, it’s important to keep up with these changes.