As anecdotal as it may seem, the confusion between the terms "bitcoin" and "cryptocurrencies" has led to many errors in the understanding of bitcoin. Bitcoin differs in several ways and in a fundamental way from other cryptocurrencies and the fact of using this same term inevitably brings many errors of interpretation on what Bitcoin really is.
This article will help you understand the fundamental difference between Bitcoin and other cryptocurrencies. We will also show why it is important to stop confusing Bitcoin with other cryptocurrencies commonly referred to as altcoins ( alt for alternatives and coins for the term tokens or "currency").
Why is there continued confusion between Bitcoin and cryptocurrencies?
To give you an example, confusing Bitcoin and cryptocurrencies would be like confusing a bicycle with a car, since both are vehicles. Certainly, semantically, Bitcoin is a cryptocurrency, just like Litecoin or Monero , for example. However, they represent different types of cryptocurrencies with distinct characteristics. Yes, it's important to emphasize that there are different types of cryptocurrencies with different uses and functions.
Thus, it is accepted that bitcoin is a cryptocurrency in the true sense of the term. So far, there is no problem of interpretation or definition. In fact, there was no problem with the definition before other cryptocurrencies appeared.
The problem actually arose when any currency operating on a blockchain was seen to be semantically compared (on the one hand) with bitcoin. From there, the amalgamation between Bitcoin and other cryptocurrencies has only become more pronounced over time, leading to ever more misunderstanding and false information concerning Bitcoin.
1/ Bitcoin is not a company
Bitcoin is not a corporation in the traditional sense, as it does not have an organizational structure or any formal legal entity. There is not a registered company that manages employees to operate Bitcoin. Bitcoin was designed to belong to no one and everyone at the same time.
Unlike a traditional business, Bitcoin is a decentralized technology and a peer-to-peer network. It is managed collectively by a global network of miners, nodes and users who contribute to its maintenance and operation.
Decisions regarding its protocol and its evolution are made by consensus within the Bitcoin community, without the intervention of a central authority or company.
Most other cryptocurrencies have legal entities. For example, Ethereum has a foundation based in Switzerland.
2/ Bitcoin has a currency function
The title of the Bitcoin white paper is "Bitcoin: A Peer-to-Peer Electronic Cash System". The statement could not be clearer. It is indeed a peer-to-peer electronic cash system. Other cryptocurrencies do not all have this vocation to be a decentralized currency. They can serve as tokens in a given system but not as a currency in the strict sense.
Bitcoin was designed from the outset to provide significant benefits as an electronic currency, such as security, transparency and speed of transactions, while eliminating the need for trusted third parties like banks.
Remember that El Salvador, which was the first country to legalize bitcoin as an official currency in the country, is - it seems - only the first in a list which will grow over time. Thus, the Central African Republic had also announced to make bitcoin a legal tender in the country, although the country's legislation is currently under discussion.
Concerning other cryptocurrencies, it would be really difficult and improbable to imagine that a country would make a currency like ETH for example, an official currency...
3/ Bitcoin is software accessible to everyone
Bitcoin is open source software, meaning it is available to anyone who wants to use it, examine its source code, and even fully participate in its development.
This feature of transparency has been one of the fundamental pillars of the Bitcoin community since its inception.
Coders and developers worldwide can access Bitcoin's source code, modify it to make improvements or custom features, as seen recently with the BitMV proposal , for example.
This is perhaps where the greatness of Bitcoin lies: It is a project accessible to all, offering a real democratization of digital currency.
4/ Bitcoin operates on a decentralized network of participants
Bitcoin is backed by a decentralized network of miners who secure the Bitcoin blockchain using a process called Proof-of-Work (PoW). This consensus method ensures network security and has proven its reliability over the years. Furthermore, Bitcoin is one of the most attack-resistant cryptocurrencies at 51%, meaning it is difficult or highly unlikely in practice for a single entity to ban and shut down Bitcoin.
The decentralization of the Bitcoin network contrasts with certain other cryptocurrencies which can be more centralized or even worse which can be based on the proof-of-stake consensus which is a system where the richest person owns the most tokens.
5/ There is a philosophy of Bitcoin
This may surprise novices who discover bitcoin at the same time as other cryptocurrencies. However, this is a fundamental point that radically differentiates Bitcoin from other cryptocurrencies.
Bitcoin, as a decentralized currency, was conceived within a specific philosophical framework. The white paper was submitted to a cypherpunk community whose members share common values regarding the right to privacy and confidentiality. In this interpretation, Bitcoin is a tool for emancipation that guarantees user freedom. Other cryptocurrencies lack this ideological dimension. Most are pale imitations of Bitcoin that have no philosophical basis whatsoever.
It is no coincidence that the creator, Satoshi Nakamoto, seems to have deliberately chosen to remain anonymous. This clearly demonstrates that the confidentiality of transactions is fundamental to the creation of Bitcoin.
Bitcoin didn't appear out of nowhere; It has a long history preceding it and there have been many attempts and experiments at creating a digital currency before its creation.
Final word: Bitcoin, not Crypto
When you see or hear the phrase “bitcoin, not crypto,” this is the set of points that are being referred to. There are also other features that help distinguish bitcoin from other cryptocurrencies. You can dig deeper into the points explained above and check out other blog posts to understand the full scope of Bitcoin.
However, this article is not a charge against other cryptocurrencies which, let us remember, can also have a meaning and a function of their own in a given system. It is mainly about understanding that bitcoin is considered more as a currency of exchange and a store of value while other cryptocurrencies are mainly diverse and varied financial assets. Which is also a good "thing" for the renewal of finance, let it be said.
See also:
- 18 anecdotes about Bitcoin
- Is Bitcoin sound money?
- How is bitcoin a superior currency?
- The main dates in the history of bitcoin
Learn more about ZoneBitcoin
Subscribe to get the latest posts sent to your email.
