What Bitcoin is and how it differs from other data management systems

Dec 10, 2021

Bitcoin is more popularly known for being one of the first online monetary systems that has ever been launched. However, there is more to it than meets the eye.

Bitcoin is supported by an incredibly sophisticated data management system that includes features and benefits that set it apart from all others. In its everyday scenario, the system operates using a blockchain management system as opposed to other common structures such as cloud-based data. 

In this system, each transaction is saved in the blockchain database, which is a server made up of multiple computers from around the world, each holding a copy of the record. When someone makes a new transaction or updates data, the record will be indicated in the next update.

Unless it is encrypted, this data is also publicly accessible over the Internet, where people can keep track of updates and previous logs.

If you want more information about the Bitcoin architecture, take a look at the infographic below.

Bitcoin defined

Bitcoin is one of the largest data management systems used today and sets itself apart from others by having the most extensive public and distributed data management systems globally.

Instead of a cloud-based system, Bitcoin records and publishes all data interactions and monetary transactions to its blockchain database, made up of millions of computers located around the world. Each device contains a copy of all pre-existing data and can be monitored by anyone.

Bitcoin architecture

The Bitcoin architecture uses specialised computers that enforce the protocols of its hardware and software to govern the entire network and its users. It is based on a proof-of-work consensus model, where one CPU is equivalent to one vote.

At the same time, the software acts as a bridge between the transaction processors and its protocol rule-set, which is sent to the rest of the network.

What makes Bitcoin different from existing data management systems?

  • A monetary token for the monetisation of data and the Internet
    The Bitcoin token is its best-known feature, which fuses monetary value with data. By doing so, data can be monetised to incentivise data submission and sharing between organisations.
  • Immutability
    Bitcoin’s immutability allows its data to remain untouched, which makes it highly resistant to fraud. Through this, cybercriminals cannot delete or make changes to published data to cover their tracks. Once it is time to audit, there is a 100% chance that the database’s integrity will remain intact. 
  • A distributed server model
    Downtime is practically eliminated thanks to Bitcoin’s distributed model, where millions of identical copies exist within a global network of computers. Sync this with combined storage, and you have a server model that is difficult to replicate. 
  • Interoperability
    Bitcoin’s blockchain interoperability is offered to all users regardless of the kind of data they manage. At the same time, there is also no set limitation on how many programmes can be automated, which grants efficient cost-saving strategies for those operating on Bitcoin. 
  • Traceability with permission-based access
    Bitcoin’s traceability allows users to consistently keep up with their data while maintaining privacy using pseudonymous identifiers and other encryption techniques. With this, even the most sensitive data can be protected and hidden from other users unless otherwise programmed by the owner.
  • Hugely reduced cost of ownership, hugely improved efficiency
    Bitcoin reduces the cost of ownership of data systems by introducing one global data infrastructure that any organisation can piggy-back onto. 

Defining Bitcoin and its essence

Bitcoin is one of the largest known data management systems available today, with millions of users worldwide. But apart from being a monetary system, it is also one of the most unique data management systems in modern society.

Get more information from the Bitcoin theory course or register with Bitcoin SV Academy today and get the ebook directly to learn more.

Bitcoin Association

Special Edition Infographic