Understanding the Relationship Between Bitcoin and Blockchain
What is Blockchain
Blockchain is essentially a decentralized database that does not rely on third parties, but instead uses its own distributed nodes for network data storage, verification, transmission, and communication. After years of operation, blockchain technology has developed rapidly, and its application scope has covered multiple fields including finance, gaming, property rights, and healthcare. In this article, we will explore the types and characteristics of blockchain.
Blockchain can be divided into public chains, private chains, and consortium chains based on their degree of openness. The degree of openness refers to whether everyone can freely join the blockchain, access on-chain information, and whether the information on the chain is open and transparent.
Public Chains, Private Chains, and Consortium Chains
① Public chains. These are the most open type of blockchain in practical applications. Public chains have no strict requirements for participation rights, and any individual or organization can freely join and exit. All data records on public chains are open and transparent, and anyone can participate in the consensus process. Public chains are considered to be completely decentralized blockchains that are not controlled by institutions. The most typical representative of public chains is the Bitcoin system, which is open to everyone. Anyone can become a node, validator, or user in the Bitcoin system, and the information in the Bitcoin system is completely open and transparent.
② Private chains. Also known as internal chains, they have a very low degree of openness. The authority to write and modify data is only in the hands of a few people or organizations, belonging to a single-center network of private institutions. Currently, many large corporate groups are developing their own private chains, which can be used for enterprise management, financial auditing, bank clearing and settlement, etc.
③ Consortium chains. Participated by multiple mutually trusted organizations with good cooperative relationships. The degree of openness of consortium chains is between public chains and private chains. The authority to write and modify is still in the hands of multiple mutually trusted organizations and is regarded as a partially decentralized blockchain. This consortium can be between countries, or between enterprises, or between banks. The participants in consortium chains have a high degree of mutual trust, fast verification efficiency, transaction costs are greatly reduced compared to public chains, and partial privacy of data can be well protected. Information and resources on consortium chains can only be shared by members of the consortium. A well-known consortium chain is the R3 blockchain consortium.
What is Bitcoin
Bitcoin is a decentralized cryptocurrency in the form of peer-to-peer (Peer to Peer, P2P), and peer-to-peer transmission means it is a decentralized payment system. The concept of Bitcoin was first proposed by someone named Satoshi Nakamoto on October 31, 2008. On January 3, 2009, Satoshi Nakamoto used a personal computer to mine the world's first batch of Bitcoin, officially announcing the birth of Bitcoin.
What makes Bitcoin special is that it is a peer-to-peer, decentralized, globally universal, non-exclusive cryptocurrency based on blockchain as payment technology. Bitcoin is not issued by any institution or individual, but is generated through a proof-of-work mechanism and massive computation, commonly known as "mining".
The use of Bitcoin requires a distributed database composed of many nodes in the entire peer-to-peer network to confirm, verify, and record all transactions. Bitcoin has a limited total supply of only 21 million coins. Currently, more than 18.69 million have been mined, and it is expected that all Bitcoin will be mined by 2140.
The Relationship Between Blockchain and Bitcoin
When the 2008 financial crisis broke out in full force, Bitcoin's founder Satoshi Nakamoto wanted to design an electronic currency that was not controlled by centralized institutions. When conceiving the underlying infrastructure, he made a very important decision: abandon the traditional centralized database model and, based on the work of predecessors, design a strongly decentralized underlying mechanism. This mechanism allows everyone to participate with equal rights, without centralized teams or institutions intervening, and once data is recorded, it cannot be changed at all. Over time, people discovered that the advantages of Bitcoin's mechanism became increasingly obvious. Even if the founder disappeared, it could still operate stably. So people extracted this underlying mechanism for research and named it "blockchain".
Overall, the relationship between Bitcoin and blockchain can be described in two points: first, blockchain technology is the underlying technology of Bitcoin; second, Bitcoin is the first application based on blockchain technology and currently the most successful application.
(1) Bitcoin is the First Application of Blockchain Technology
After Bitcoin was created, it quickly became popular. After the price skyrocketed, people began to pay attention to its underlying technology. After in-depth research, people found that this technology could be applied to many fields, and later this technology was named blockchain technology.
Currently, according to the development history of blockchain, it is defined as blockchain 1.0, 2.0, and 3.0 eras.
The blockchain 1.0 era only refers to the underlying technical architecture that supports the operation of the Bitcoin system, which is blockchain in the narrow sense. At this stage, Bitcoin's goal was to replace the traditional financial system and explore the feasibility of becoming a global payment currency. The blockchain extensions that emerged during this time were mostly improvement proposals for Bitcoin.
Around 2014, Vitalik Buterin used smart contracts to abstract features such as "decentralization, openness and transparency, consensus mechanism, and token model" from Bitcoin's technical architecture, upgrading it to blockchain 2.0, and the broad concept of blockchain was born. Blockchain 2.0 is programmable finance, which is the application of blockchain in the fields of economics, markets, and finance.
By blockchain 3.0, technological development can meet more complex business logic and expand application scenarios from finance to all industries. "Blockchain+" basically covers all aspects of life, including film and television copyrights, food safety, medical health, logistics, election voting, public welfare, etc.
Overall, from blockchain 1.0 to 2.0 to the current 3.0, the entire iteration process has lasted more than 10 years. If blockchain 1.0 is the embryonic stage of blockchain technology, then 2.0 is blockchain and finance, that is, blockchain is considered the most likely scenario to land first. By blockchain 3.0, there is a full-scale outbreak, driving greater industrial reform.
(2) Bitcoin Has Been Given More Powerful Functions Beyond Payment
After more than ten years of development, Bitcoin has formed a strong consensus globally and has become a value asset anchored by thousands of assets in the crypto world. Due to its scarcity and deflationary issuance mechanism, more and more people regard Bitcoin as "digital gold". Because Bitcoin has a low correlation with other assets, after the outbreak of the COVID-19 pandemic, for the purpose of inflation expectations and seeking high-yield assets, Bitcoin has been accepted by more and more mainstream institutions and has become their investment target for diversifying investment risks and achieving asset diversification. So far, at least 130 countries worldwide have issued laws or policies regarding Bitcoin, and terms, definitions, risk warnings, taxation, etc. have all been included in the regulatory scope. In addition to the spot market, the derivatives market around Bitcoin, such as options and ETFs, is also booming, and the market is becoming increasingly mature.
The original intention of Bitcoin's design was to address the drawbacks of the existing financial system. Its generation method based on cryptographic algorithms solved the trust problem. However, after more than ten years of development, Bitcoin has consolidated its unshakable consensus, and people's confidence in crypto assets continues to grow. For those emerging markets in trouble, Bitcoin has become a means of value storage.
Disclaimer
This article may contain content related to products that are not available in your region. This article is only committed to providing general information and is not responsible for any factual errors or omissions. This article only represents the author's personal views and does not represent OKX's views. This article is not intended to provide any of the following advice, including but not limited to: (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; or (iii) financial, accounting, legal or tax advice. Holding digital assets (including stablecoins) involves high risks and may fluctuate significantly or even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions about your specific situation, please consult your legal/tax/investment professional. Information appearing in this article (including market data and statistical information, if any) is for general reference only. Although we have taken all reasonable care in preparing this data and charts, we assume no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less from this article may be used, provided that such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: "This article is copyrighted © 2025 OKX and used with permission." Permitted excerpts must cite the article name and include attribution, such as "Article Name, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.
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