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New Coins on the Block: What's the difference between Bitcoin and Blockchain?

Created 9/19/2018 by Veronica Marzilli
Updated 10/4/2018 by Mary Medeiros McEnroe
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At  the NIC conference, I was interested to hear Travis Jank of KRAMBU talk about the opportunity and challenges from the increasingly popular crypto currency mining operations - and why the region should be keeping an eye on this emerging market.

Jank offered a primer on the key aspects of these businesses, including:

Bitcoin is essentially digital money, or cyrptocurrency, that you can exchange for regular currency. Bitcoin is the most popular of over 2,000 existing cryptocurrency, and it runs through a "smart wallet." The smart wallet sends and receives payment digitally, scanning for a serial number for each unique ID for each coin before accepting money from another party.

So, that's Bitcoin, so what's Blockchain?
Blockchain is the underlying tech that allows cryptocurrency to be exchanged- it's like the TCIP protocol that invisibly supports the Internet, so that everyone can access it without having to worry about programming.

Blockchain acts like a checkbook - it tracks and creates a ledger of all transactions it has ever conducted. Anyone on a Blockchain network can see where the money has gone since the beginning of time- which provides users with the security of knowing that the funds are legit and aren't bring duplicated. You can execute contracts, transfer of money and audits within Blockchain just as in traditional business systems and trusted networks.

And... what about datamining?
For the virtual currency to exist, you need to physically operate, or mine the currency. Instead of a server farm, each user brings their own processing power to fuel the transaction. It's similar to credit card processing by merchants- when you swipe your card, the merchant processing process of checking balances and arranging funds are distributed from retailers and credit card companies without the customer having to even think about it.

A block is a batch of transactions that are verified - once they are validated and makes sure the currency is valid. Once that's secured, the block is closed and stored as a ledger. This block is usually created, validated and closed within 10 minutes or less, so it's very hard to hack. Every time a new block is added to the ledger, it builds off the fingerprint of the last block, thus creating a "chain," that can't be changed afterwards.

So it's more about validating than "mining." It's still a bit hard to understand how people are making money on this, so I'd welcome any links or comments related to that issue... and in the meantime, hopefully defining these terms was helpful.


 

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Comments (2)
John Morris on 10/04/18 on 09:43 AM (Pacific Time)
This is a great conversation Veronica, thanks for raising our awareness on this rapidly evolving customer class. I would also note here that the Northwest Power and Conservation Council is studying this topic. My friend Massoud Jourabchi at the Council just gave a very informative presentation on energy impacts of this specific type of mining. He is a great resource for more information if anyone wants to learn more.

Mary Medeiros McEnroe on 10/04/18 on 09:51 AM (Pacific Time)
This was a great session at the NIC. It really broke down how Blockchain works in plain language for non-technical people. It was one of the best presentations I've seen on the technology.

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