BEGINNER PATH / 09
BITCOIN VS CRYPTOCURRENCY.
Bitcoin is a cryptocurrency, but “cryptocurrency” is a category, not another name for Bitcoin. Different cryptoassets can have very different networks, supply rules, governance, security models and uses.
Cryptocurrency is a broad label for digital assets and payment systems that use cryptographic techniques. Bitcoin is one specific open-source peer-to-peer monetary network with its own consensus and issuance rules.
COMPARE THE RULES / 10
THE NAME “CRYPTO” TELLS YOU VERY LITTLE.
Before using any cryptoasset, you need to know who can change its rules, how units are issued, how transactions are validated and whether control is concentrated in a company, foundation or small group of participants.
| QUESTION TO ASK | BITCOIN | OTHER CRYPTOASSETS |
|---|---|---|
| What is it for? | Peer-to-peer electronic money and a monetary network. | May target payments, smart contracts, applications, governance, games, stable-value tokens or many other uses. |
| How is supply determined? | Predictable issuance with a maximum supply approaching 21 million under current consensus rules. | Supply policies vary widely and may be fixed, inflationary, discretionary or controlled by project-specific rules. |
| How is consensus reached? | Proof-of-work with independently validating nodes. | Can use proof-of-stake, permissioned validators, proof-of-work or other mechanisms. |
| Who can change it? | Software changes only matter when network participants choose to adopt compatible rules. | Governance arrangements differ substantially by project. |
Do not evaluate an unfamiliar cryptoasset merely because it is described as “like Bitcoin.” Compare its actual design, control, supply, security and purpose.