I am going to make this very simple:
Bitcoin is a kind of crypto. But not all crypto is like Bitcoin.
Bitcoin has a very narrow and specific use.
Other cryptos try to do many other things that Bitcoin does not try to do.
For the rest of this article, we will cover these similarities and differences in greater detail if you want to know more.
Key TakeawaysThere is one thing that unites (nearly) all cryptocurrency…including Bitcoin:
They all utilize a blockchain.
A blockchain is just a kind of database. It stores information about the coin balances of every wallet on the network.
There is a lot more to blockchains than that, and to go deeper would be beyond the scope of this article.
So…all cryptos use a blockchain (or claim to).
What else do nearly all cryptos have in common?
They all seem to use public/private key cryptography.
This is also a complicated topic that involves a lot of math, so I will try to simplify it.
Users can send and receive cryptocurrency to a “public address”. This is like your email address.
Accessing the coins at this public address requires access to the “private key”. This is like the password to your email account.
Anyone who has both your password and your email address can send and receive email at your address.
Crypto works the same, except (unlike your emails) crypto can’t be copied or duplicated. It can only be moved.
That is really all Bitcoin has in common with every other crypto out there.
So now, let’s look at some other kinds of cryptos that don’t have anything to do with Bitcoin.
Bitcoin has block times targeting 10 minutes, meaning a new block is added to the blockchain about every 10 minutes.
Other cryptos can set their target block times to anything they want, and many choose to add blocks much more often.
Ethereum, for example, adds a new block every 12 seconds.
There are tradeoffs for shorter or longer block times, and discussing those is also beyond the scope of this article.
This stackexchange thread is good place to start if you want to learn more about those tradeoffs.
Bitcoin ‘miners’ use lots of powerful computers and tons of electricity to order and secure transactions in Bitcoin.
This is known as ‘Proof-of-Work (PoW)’ mining, and it allows everyone using Bitcoin to be “on the same page” so no one is reliant on a centralized, trusted person in the middle to be honest.
But not all cryptocurrencies use Proof-of-Work.
Here are some methods other cryptos use to attempt to do the same thing:
This is probably where the differences really become real to most people.
Bitcoin has a very simple purpose: to be ‘digital gold’; a digital currency that cannot be controlled or inflated by anyone.
Other coins are trying to do many other things that have nothing to do with Bitcoin’s purpose.
Some coins exist to help founders of companies raise money without having to give up equity to investors.
Users buy the coin thinking it will increase in value and that’s all there is to it. The creators of the coin owe nothing to the buyer after that.
Other coins exist as crypto-derivatives of other assets, like U.S. Dollars. These are called stablecoins.
You give a company $1, and they give you one stablecoin. You can sell that stablecoin back to them at any time and get your $1 back.
The company does it’s best to make sure that stablecoin is always worth exactly $1. If the coin becomes worth more than $1, the company prints more stablecoins. If the coins becomes worth less than $1, they destroy stablecoins.
And there are many other attempted use-cases for cryptocurrencies, such as:
And many more.
If you are wondering how a cryptocurrency helps people, say, lend money without a middleman, that is a very good question, since so many of these lenders have middlemen who steal the money.
Many experts view alternative uses of blockchain and crypto beyond what was first developed for Bitcoin as suspicious and unproven.
That’s because most turn out to be outright scams or destined to fail.
Bitcoin has a hard capped supply of 21 million coins. Once those are mined, that’s it - no more Bitcoins will come into existence.
Other coins choose a different cap. Litecoin, for instance, has a cap of 84 million.
Some coins choose no supply cap at all - Ethereum, for example.
In truth, this article could go on for hours about the various differences between all the different cryptocurrencies.
There are literally millions of cryptos out there and they all claim to be doing something unique and truly innovative.
Few really are, which is why I’ve kept this mostly to Bitcoin as a comparison point between it and “crypto” as a whole.
But this rabbit hole is quite deep, so you will no doubt have many more questions.
I have included A LOT of links in this article that should make it easy to go as deep as you want on this topic.
In short, though, Bitcoin is just a kind of cryptocurrency. And I would argue, the only one that matters.
