Cryptocurrency Vs Bitcoin Vs Blockchain Differences

Published: 1st July, 2024 | Last Updated: 1st July, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

Bitcoin is a type of cryptocurrency, and both cryptocurrencies and Bitcoin use blockchain technology. In this post, I will explain the difference between Cryptocurrency Vs. Bitcoin Vs Blockchain. We’ll start with blockchains.

Also, see What Is the Difference Between Crypto and Bitcoin.

What Is a Blockchain?

Cryptocurrency Vs Bitcoin Vs Blockchain

A blockchain is a database that anyone can own a copy of, and anyone can participate to verify the validity of the data using cryptography.

Most blockchains are famous for being public, meaning they are open to everyone. However, you can also have private blockchains that are accessible to select individuals or organizations. 

A blockchain can store any type of information: medical records, identification information, supply chain data, or cryptocurrency transactions.

Participants can download a copy of the blockchain to their computer or server. This is why you will come across descriptions of blockchains as being distributed databases.

Furthermore, the people who hold a copy of the database form a network, and together, they decide how to add more data to the database and which new data inputs to accept or reject. 

Why Is It Called a Blockchain? 

Think of the database as a folder with Excel spreadsheets in it.

Say each spreadsheet can fit 1,000 lines of data.

Once the spreadsheet is full, you need to start a new one.

You can have a link at the bottom of the first spreadsheet pointing to the next one.

Each spreadsheet is a block of information, and each block connects to the next to form a chain of blocks or a blockchain. 

infographic blockchain illustration

Furthermore, network participants can use maths to verify block number one points to block number two. This makes it impossible to change the data or point the block elsewhere. 

Blockchain networks are desirable because 

  1. There is no central authority such as a central bank, company, or government to mediate. 
  2. Once you enter the data into a blockchain and everyone accepts it, that data is immutable. No one can edit or change that information.
  3. Secure transactions: a properly set up blockchain is impossible to mess with. You can be more certain about the Bitcoin blockchain than you can be about the government.
  4. Low transaction costs: you can transfer millions of dollars for a few dollars or cents
  5. Speed of execution: you can send digital money within minutes compared to the traditional financial institutions that take 2-5 business days to process your request
  6. 24/7: no one needs to go home to sleep or go on vacation. Blockchains are open 24/7.
  7. Transparent: anyone can check and verify transactions and data.

Participants who add new blocks to the blockchain are often rewarded for doing so. This reward is usually in the form of a newly minted cryptocurrency plus transaction fees. 

What Are Cryptocurrencies?

Different Cryptocurrencies

Cryptocurrencies are entries in a digital ledger in the form of a blockchain.

They have no physical representation like our dollars or euros in the material world.

Instead, they are just entries in a database. I could set up my own blockchain and enter information into it like this.

  • Magda has 30 BIRDIE coins
  • Isabel has 2 BIRDIE coins
  • Frank has 13 BIRDIE coin
  • etc

Note how I have created digital assets out of thin air this way. 

However, such digital currencies have some essential properties.

  1. They have all the benefits of a blockchain: immutability, decentralized, etc.
  2. You can only spend a BIRDIE once. If I send you an email saying, “Here, have a BIRDIE,” you know I can send that email to anyone. I can spend the same BIRDIE as many times as I want. But with a blockchain, I need to deduct one BIRDIE from myself and add a BIRDIE to someone else’s account. Otherwise, participants in the network will reject my transaction. This is known as the double spend problem, and Bitcoin was the first to solve it. 

Transactions on a crypto blockchain are usually pseudonymous. Instead of seeing people’s names, you will see something like 

  • 13e80y31ohro2h: 30 BIRDIE coins
  • 3082y foheeofhe: 2 BIRDIE coins
  • 20e8dh2eocdwh: 13 BIRDIE coin
  • etc

You can think of those strings of characters as the equivalent of an IBAN or bank account number. In crypto speak, we call them a public address.

You can share your public address with anyone, and they can use it to send you crypto. 

How sending crypto works

To send someone your crypto, you need to verify who is asking for it.

To do this, you use what’s called a private key. This is a secret code that you only have access to.

In the early days, you would need to be a coder to do this, but nowadays, you can use a piece of software called a crypto wallet that does this for you.

A crypto wallet stores your private keys, and you can see the crypto assets that you own on your various public addresses. 

How Do You Buy Cryptocurrencies? 

In the early days, you had to meet up with someone and hope they didn’t knock you on the head with a wrench while you exchanged cash for crypto.

Nowadays, there are very large and liquid marketplaces called4 cryptocurrency exchanges where you can deposit cash and buy the virtual currency of your choice. 

You can start by reading my guide on what is the best crypto to buy right now. 

What Is Bitcoin? 

Bitcoin

Bitcoin is two things. 

  1. First, the Bitcoin network is a network of participants who verify transactions on the Bitcoin blockchain.
  2. Secondly, it is the currency of the Bitcoin network.

People usually denote the network with an uppercase B and the coin with a lowercase b. 

How bitcoin is different from other cryptocurrencies

  1. Bitcoin was the first to launch. It was created by a person or group called Satoshi Nakamoto in January 2009. With the first block, Satoshi inscribed a new title from a British newspaper: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”. This proves the date but also indicates that Bitcoin solves the issue of indiscriminate money printing.
  2. Bitcoin is consistently the largest cryptocurrency by market cap. At the time of writing, Bitcoin’s market capitalization is $1.3 trillion, accounting for 50% of the total crypto market. 
  3. The supply of bitcoin is limited to 21 million, with 19.8 million already in circulation. Bitcoin’s limited supply is why many consider it to be a store of value similar to gold rather than a medium of exchange.
  4. Bitcoin uses a proof of work consensus mechanism, while many other cryptocurrencies use proof of stake.
  5. It requires a lot of computational power, which consumes a lot of energy. This is more than that of a small country such as Austria or Switzerland. However, 50% of this comes from renewable energy sources, which lessens the environmental impact.
  6. In some countries, such as El Salvador and the Central African Republic, Bitcoin is now legal tender.

Other Important Cryptocurrencies

1. Ethereum

Ethereum

The Ethereum network was conceptualized by a 17-year-old kid called Vitalik Buterin after he came across Bitcoin. 

Today, Ethereum is the largest cryptocurrency after Bitcoin, accounting for 15% of the market at the time of writing.

What’s unique about the Ethereum blockchain is that it allows developers to build applications using smart contracts. A smart contract is just a code that allows you to implement “if..then..” logic.

For example, “If the weather is bad, then pay insurance claims to policyholders.” 

The other unique thing about Ethereum is that you can mint your own token.

This could be a fungible token that can be used in your app. For example, you might need it to transact on the app, or you might need it to vote on parameters, e.g., interest rates.

It could also be a non-fungible token representing a piece of digital art, an identity, a concert ticket, and more. 

The emergence of Ethereum spawned the creation of thousands of apps. Some popular apps are

  • Uniswap: a decentralized exchange where you can exchange ETH and other Ethereum-based tokens known as ERC-20 tokens. Uniswap is the largest decentralized exchange.
  • Compound: a borrowing and lending application
  • Maker and DAI: A decentralized stablecoin where 1 DAI is equal to 1 dollar. 
  • Yearn Finance: a protocol that automatically optimizes your stablecoin investments

After the launch of Ethereum, many copycats emerged that wanted to be better than Ethereum.

Cardano and Polkadot are two examples of protocols that were launched by the founders of Ethereum.

But the biggest contender these days is Solana.

2. Solana

Solana is much faster than Ethereum.

While Ethereum can handle 14 transactions per second, Solana can handle 65,000.

Solana has been growing fast over the last bull run.

However, its market cap is a quarter that of Ethereum’s, and most users’ funds are still locked up on Ethereum.

Also, Solana is seeing a lot of development.

These days, people are printing thousands of new meme coins on Solana, which are booming and crashing.

People who buy Solana meme coins view it as gambling or playing the lottery. Sometimes, you can make multiples. Meme coins are easier to understand than other blockchain crypto tokens because they do nothing. It’s just a matter of whether you think the meme will become viral enough for others to buy it just for fun. 

3. Chainlink

Remember how I gave the example of an app paying out insurance when the weather is bad?

The blockchain doesn’t know what the weather is like. It doesn’t know anything about the external world.

It doesn’t even know the price of its native coin on the crypto market.

To write smart contract logic, you need reliable external information fees.

This feed is known as an Oracle, and Chainlink is the largest provider of Oracles in the crypto world.

Chainlink tries to provide this information in a decentralized manner. For example, it sources price feeds from multiple data providers so that if one of them fudges the data, it can be compared against the rest. 

4. VeChain

Do you know what the biggest fraud industry is? It’s counterfeit goods.

The key to addressing it is traceability.

How do you know that the Louis Vuitton bag you are buying is original and not a fake? This is where blockchain solutions such as VeChain come in.

By entering the origin and data about a product into the blockchain, you can know the truth about a product.

Blockchains are tamperproof, so they are ideally suited for supply chain management. 

5. Helium

Helium is a decentralized physical infrastructure (DePIN) provider.

They are building a mobile network that is crowdsourced from the public. Users place a router-like device in their house and are rewarded with MOBILE tokens in return for doing so.

This way, Helium doesn’t need to make the high upfront investment required to set up mobile towers.

Other examples of DePIN are Akash, which crowdsources server space, and Filecoin, which crowdsources storage space. 

6. Ondo Finance

Ondo aims to tokenize real-world assets.

In partnership with Blackrock, the world’s largest asset manager, they are tokenizing treasury bonds.

However, RWAs can extend to other financial products such as stocks or real estate. See What is Ondo Finance for more.

FAQs

Are blockchain and cryptocurrencies the same?

Cryptocurrencies use a blockchain as a distributed digital ledger to store financial transactions. However, a blockchain can contain any kind of information, not necessarily about crypto transactions. For example, it might include supply chain data, medical records, or identity information.

Is blockchain possible without cryptocurrency?

Yes, it is possible to have a blockchain without anything to do with cryptocurrency. Blockchain technology is essentially a decentralized, distributed ledger that records transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.

Is Binance a blockchain?

No, Binance is not a blockchain but a cryptocurrency exchange platform. However, BNB (Binance Coin) is a cryptocurrency created by Binance, and it operates on its own blockchain called Binance Chain.

Is blockchain just crypto?

No, blockchain is not just crypto. Blockchain is a technology that serves as a decentralized, secure, and transparent ledger, which can be used for various applications beyond cryptocurrencies, such as supply chain management, healthcare, voting systems, and more.

What is the difference between Bitcoin blockchain and cryptocurrency?

The difference between the Bitcoin blockchain and cryptocurrency is as follows:

  • Bitcoin Blockchain: This is the underlying technology that powers Bitcoin. It is a decentralized, distributed ledger that records all Bitcoin transactions. Additionally, the Bitcoin blockchain ensures transparency, security, and immutability of transaction records.
  • Cryptocurrency (Bitcoin): Bitcoin, the cryptocurrency, is a digital asset and a medium of exchange that uses cryptographic techniques to secure transactions. It operates on the Bitcoin blockchain. Bitcoin can be traded, spent, and stored. It is also the most well-known application of blockchain technology.

Up Next

What Is the Difference Between Crypto and Bitcoin?

what's the difference between crypto and bitcoin

In this post I go into depth explaining the difference between crypto and bitcoin.

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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