Why It’s So Important to Distinguish Between ‘Crypto’ and ‘Bitcoin’

The Ministry of Finance has launched the ‘Smart in Crypto’ (SIC) campaign. The initiative aims to educate young people about the risks of investing and trading cryptocurrencies. Not superfluously, no less than 27 percent of young adults invest in cryptocurrencies such as bitcoin. Yet an important distinction has not been made: bitcoin is a cryptocurrency, but ‘cryptos’ are fundamentally different from bitcoin.

Smart on Crypto

Last week, the Ministry of Finance launched the ‘Smart in Crypto’ campaign. This is announced by Minister Kaag Social Media a lot of false and unreliable information is shared about cryptos. With the online campaign, the minister wants to inform young people about the possible risks.

“If you’re thinking about buying cryptos, make sure you know the risks and don’t get blinded by promised high returns”says Kaag in one announcement.

Information and explanations about crypto can be found on the Slim in Crypto website. In this way, you can get answers to questions such as “how do I know if a crypto provider is trustworthy?” A good initiative to introduce young people to the world of digital currencies. Unfortunately, an important distinction has not been made in the campaign.

Bitcoin and crypto

Although bitcoin is the first cryptocurrency, no other cryptocurrency resembles this founder. After Bitcoin’s success, there are thousands
altcoins


altcoins
Any cryptocurrency other than bitcoin.

‘ are available that have many similarities to Bitcoin and all make different promises. It is therefore logical that a beginner who wants to dive into cryptocurrencies often cannot see the forest for the trees.

With that in mind, the Ministry of Finance’s project is certainly a good initiative. After all, many crypto projects are scams, prone to hacks, or completely centralized around a small group of developers who are in control.

Therefore, it is important to distinguish between ‘crypto’ and Bitcoin. The 5 most important differences are the following.

  • Bitcoin is decentralized. There is no central party in control, making it safe and reliable. This is not the case for most ‘Cryptos’. The US regulator SEC seems to recognize the difference and has stated several times that it considers most ‘cryptos’ as securities, while counting bitcoin as commodities.

    The innovation is decentralized, but altcoins do not offer that. Bitcoin, due to its decentralized nature, provides financial sovereignty, and no one can stop bitcoin transactions, create more bitcoin, or take over the network. The distribution of the coins is also fair and proportional as planned. However, many altcoin tokens are aimed at enriching the founders, who often give themselves a large amount of coins upfront. Usually, altcoins offer no sovereignty and all power and control is in the hands of a small group.

  • Thanks to bitcoin mining and its decentralized nature, Bitcoin is by far the most secure. When you store money on a blockchain, you naturally want it to be secure. Due to the decentralization of miners and users, the lack of a central authority and the high hash rate, the bitcoin network is the most secure network in the world. The difference is like night and day; no altcoin comes close.
  • Bitcoin may promise to be able to some other cryptocurrencies. Many altcoins claim to have more functionalities, to be able to perform transactions much faster, to consume less energy, or to be superior to bitcoin in some other way. However, these ‘improvements’ always come at the expense of decentralization and security. Thereby they miss their target.

    In addition, a lot of work is being done on Bitcoin. Upgrades like Taproot and developments like the Lightning Network offer new possibilities without compromising what bitcoin originally is: a central and secure network for storing and transferring value.

  • The network effect, bitcoin has a huge advantage over other cryptocurrencies. There are estimated to be between 100 and 200 million Bitcoin owners. The adoption of altcoins, on the other hand, is minimal and they are hardly used. Due to its head start and exponential growth, it is highly unlikely that any other cryptocurrency will ever overtake bitcoin.
  • The history of Bitcoin is unique. Bitcoin developed out of sight and under the radar, with no one gaining control of the network. With the disappearance of Satoshi Nakamoto, the bitcoin project became completely decentralized. Today, there are many more eyes on the market, so gradual, organic growth is not an option. With most altcoins, there is interest from day one: tokens, for example, are highly concentrated among the founders or a small number of investors. Developers also often find it very difficult to relinquish control.

Read more about these 5 differences between bitcoin and all other cryptocurrencies in this article.

In the news, on the radio and now also in the Ministry of Finance’s campaign, no distinction is made between bitcoin and crypto. And while the ‘Smart in Crypto’ campaign is full of useful information about the risks of investing and potential pitfalls, it is unfortunate that the stigma around bitcoin is mainly caused by other cryptocurrencies.

Where the majority of all altcoins were only started to make the founders and a small group of investors rich quick, bitcoin offers a decentralized alternative to our current monetary system and with it hope for people all over the world for a better future.


Read here, for example, how bitcoin as a censorship-resistant money helps activists protest groups

Leave a Comment