What are the differences between cryptocurrency and Bitcoin? If you consider all the aspects, you will see that Bitcoin is quite different from the other cryptocurrencies in both features and functionality.
However, most of the people do not know about it. Well, not anymore. This article will enlighten you about it and help you to trade and invest in a much more knowledgeable and confident manner.
This is ideally the new era where there is a new global currency called cryptocurrency. This digital currency is helping businesses all over the world to make monetary transactions in a much more secure and safer way.
It also needs a limited amount of time and involves low transaction costs which adds to its importance. Check out Differences Between CPU and GPU Crypto Mining.
Cryptocurrencies are much more than just traditional currencies and that is why these coins are considered to have the potential to disrupt the global economy.
Ideally, there are different types of cryptocurrencies and all of these coins are not created equal, including Bitcoin. Therefore, it is important to know the differences between them.
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4 Differences Between Cryptocurrency and Bitcoin
The introduction of the digital currencies has made it possible to use them for making transactions without requiring any interference of a third party or going through strict government regulations.
Apart from it, the low transaction time and charges are a huge blessing in disguise for the companies that need to make international transactions frequently.
However, if you do not know the differences between the cryptocurrencies and Bitcoin, you will not be able to make the right choice. Therefore, go through this article carefully.
1. Basic Differences
Bitcoin is one of the pioneers in the crypto field and is also one of the most popularly known and commonly used digital currencies. It makes the best use of cryptocurrency.
This digital currency is not controlled by any centralized authority. This makes it significantly different from the fiat currencies that are issued by the governments as well.
On the other hand, cryptocurrency is actually a term that refers to the technology used. This actually acts as a medium of exchange to facilitate conducting different financial transactions, both across the borders and within, in a safe and secure manner.
Cryptocurrency is a digital currency that utilizes encryption techniques. This helps in the process of regulating the production of new units of currency. And, at the same time, this technology also helps in verifying the fund transfers.
2. The Legality Aspect
As far as the cryptocurrencies are concerned, any type of it launched as an independent digital alternative to currency is believed to be legal. This actually guarantees the payment of the desired value which typically comes in an encrypted form.
On the other hand, Bitcoin does not come with any such value. This is because Bitcoin typically sets off the encryption technique of cryptocurrency but this actually does not come with any specific legal support from the central bank.
Add to that, it is also unregulated and is a private digital currency. Surprising as it may seem to you, Bitcoin does not actually have any value base or an underlying asset.
3. Technological Differences
Bitcoin technology is open-source software that can be used to transfer money from one person to another or from one place to another across the globe. This coin, which is also called a crypto coin, has been designed especially to facilitate cross border transactions through digital currencies.
The technology involved in it not only eliminates the need for governance and control by a third party but also simplifies the entire working process, apart from the obvious benefit which is low cost transactions.
The technology of Bitcoin does not need it to have a physical form or be physically present to affirm a transaction but still makes it one of the best, safest, and most secure ways to transfer funds across the globe. All these are done by making the best use of the blockchain technology.
This is actually a distributed ledger that maintains all of the records of all peer-to-peer transactions that take place in a safe, secure and low-cost way. It also allows the public to access the information to see the financial transaction that has been carried out from anywhere and anytime.
In comparison, the cryptocurrency technology is that which acts as the medium of exchange, as said earlier, to allow people to make transactions through digital currencies anonymously.
It is the cryptography technology used by the cryptocurrencies that makes it a safe and secure platform to send and receive money. This technology makes cryptocurrencies and other virtual digital assets like Bitcoin that do not have any physical form as well.
However, the cryptography technology of the cryptocurrencies makes these coins easy to work with the distributed ledgers. This technology not only facilitates in making transactions but also in crypto trading which is much similar to trading any products or services via the internet.
The cryptocurrency technology is developing at an astonishing pace since more and more companies are investing a lot of money for its development to make the process even more secure with better safety and security measures put in place.
4. Head to Head Differences
The primary aim of Bitcoin is to enhance the speed of transactions as well as simplify the process since there are not many government restrictions to follow in the process. However, on the other hand, the main objective of cryptocurrencies is to make sure that the transactions made are safe, secure, and low cost.
When it comes to trading, you can trade only by using Bitcoin as the only currency. In comparison, when you trade with cryptocurrencies, you will get a wide variety of crypto coins to trade with, solely or as a pair.
In terms of popularity, there is no doubt that Bitcoin is one of the most popular and most commonly used digital currencies in the world. In comparison, though the number of crypto coins has increased dramatically over the years, all these coins are far behind Bitcoin when it comes to their popularity.
It is due to the differences in strategy that make Bitcoin less flexible. This is because the Bitcoin strategy is built mainly for lowering the time of transactions and the cost of influencers.
On the other hand, cryptocurrencies are more flexible since their strategy is to provide a safer and more reliable platform for the users to trade crypto coins on.
As for the status, Bitcoin still has to be accepted by several governments and merchant outlets. The primary reason behind it is its anonymity. Though the transaction entries can be seen in the distributed ledger, these seem to be meaningless numbers to others since there is no particular sequence in it.
On the other hand, the good thing about the cryptocurrencies is that they are seeing a fast change in its status and acceptability due to the changes brought in recently to ensure more transparency in the transactions made. As a result, they are able to work with several other industries of different kinds.
Which is Better – Cryptocurrency or Bitcoin?
There are lots of people who think that Bitcoin is far better than the other types of cryptocurrencies simply because this is the first cryptocurrency that came into existence way back in 2009.
However, there is no reason to overlook the other cryptocurrency technologies, a lot of which have come to existence just a couple of years back and a few of these coins are even specialized for use in a few specific sectors.
The fact that other crypto coins are also doing quite well in the given scenario is due to the ever-growing competition between them as well as Bitcoin.
As a result of this heavy competition between them, most of the crypto coins of today are constantly on the lookout to improve the technologies that they are using so that they can enhance their features and functionality.
This continual effort by the crypto companies has paved the way for improved performance results as well as a lot of innovation in the security measures to make the coins safe to use.
Yes, it is true that at a particular point in time, and quite a long one at it, Bitcoin was the only one on the blockchain that was ruling the industry.
In those days especially, there was not much of a difference between the terms Bitcoin and cryptocurrency and both were often used interchangeably.
However, over time and with the emergence and evolution of technology a lot of different types of crypto coins came into existence.
This gave the people a significant chance to deviate from the use of pure money pretty quickly. This is when the technologists made the best use of the opportunity and started experimenting with a few specific aspects.
These particular aspects of crypto coins include a decentralized name registry, peer-to-peer transaction, order confirmation and others that will help in delivering messages in a unique and separate manner to the users.
However, just as the market was inundated with different types of crypto coins pretty soon, a lot of these projects were also dumped as quickly as they were introduced.
This is simply due to the reason that these particular crypto coins were not able to implement the technology in a better way or use it fairly.
Cryptocurrencies, as you may know, work on blockchain technology which is a Distributed Ledger Technology, commonly referred to as DLT.
This consists of several blocks or units of crypto coins that are linked with one another thereby creating a chain.
Each of these blocks contains all the necessary data and information and is blended together after the verification of each of the blocks created.
When the verification process is duly completed on the blockchain, these blocks are given validation based on the data available from the previous blocks before these are added on to the chain of transactions.
These blocks then get saved in the distributed ledger permanently and are known as a blockchain.
With the use of this specific technology, cryptocurrency plays the role of an asset class which mainly involves the use of coins that are developed from the sequence of Distributed Ledger Technology.
This is why the cryptocurrencies can also be considered as resources or tools that are present on the blockchain network.
This can help in performing specific tasks such as buying, selling, investing and trading crypto coins. The native token or sub-token of the blockchain also helps in micro-tipping as well as making other allied monetary aspects.
In such situations, the token that is used based on the distributed ledger for the specific purpose is typically referred to as the blockchain.
Cryptocurrency is actually a term that refers to the art of writing or solving codes. For this, the digital currency uses cryptography technology which helps in solving different challenges on the network.
As for Bitcoin, it is this technology that is referred to as the token. This is however pretty dissimilar from dealing with Ethereum and other blockchain projects.
In such cases, it is the network that is referred to as the technology. Also, the Ether is referred to as the token and the transaction gets paid in gas.
The fact that Bitcoin seems to have grown in popularity is primarily due to the exceptional rise in price per coin to 13,000 US Dollars in the previous year.
Along with it came the overlaying union and effects of technological innovations, banking regulations, and privacy policy.
In spite of these significant developments, there are lots of retailers who still consider Bitcoin to be illegal and do not embrace it as others have already.
Also, the rise in popularity of Bitcoin has compelled the central banks all over the world to express their concerns about using these coins as private currencies.
However, despite its low acceptance, Bitcoin is a digital currency that is known to almost all users and is also one of the most commonly used crypto coins.
It is the first coin created by Satoshi Nakomoto and came to be known as a cryptocurrency.
After that, all types of digital currencies created and introduced in the market were referred to as Altcoins or Alternative Coins such as Ethereum, Litecoin, and other peer coins and feather coins.
You can store Bitcoin and other crypto coins offline on local hardware, a process that is called cold storage.
This prevents anyone else from hacking the network and stealing the coins. However, if you lose the private keys, you will not be able to access your account and you will lose all your coins.
As for the other forms of cryptocurrencies, in several countries these are looked at as a medium for funding terrorism and also a suitable medium for money laundering.
As a result, the central banks of these countries have special groups formed who are vested with the responsibility to scrutinize digital currencies with support from the global central banks before these currencies can be considered as a legal tender.
In countries like China, the policy is very clear and explicit. The central bank of the country has complete control over the crypto coins. Therefore, as of now, using cryptocurrencies will be considered as a clear violation of the foreign exchange rules.
However, in spite of the fact that the central banks may have crypto transactions, China has not provided the private digital coin issuers with the provision to trade Bitcoin and other crypto coins.
Nevertheless, in spite of all the differences between cryptocurrencies and Bitcoin, the gap between the two is constantly and rapidly diminishing with each passing day due to the transparent and sophisticated technologies.
It will not be an exaggeration if it is said that soon the market will be more discrete and the crypto coin that will provide the highest value will be at the top of the ranking list.
Conclusion
Bitcoin being the pioneer initially had a greater share in the crypto sector but the new cryptocurrencies introduced now are equally good. With the differences in them now known to you, you can choose one other than Bitcoin to trade with.
I have special interest in crypto and intend to help common people to gain knowledge about the digital asset as well as its potential. Follow Me at Linkedin.
