Why You Should Understand the Difference Between Bitcoin and Other Cryptocurrencies

bitcoinIf there is one word that has been on the lips of technology aficionados and finance experts alike more than any other in the past year or so, it has to be Bitcoin.

Bitcoin is the term for a digital currency that has gained tremendous momentum, both in terms of its usage by adopters and its value as an investment, in the decade or so since it was first created. These coins are so popular that it’s likely that you have heard of them even if you do not take regular deep dives into the worlds of money or technology. Yet if you only know casually about Bitcoin, you might be a bit hazy about it intersects with another world that often is mentioned in the same breath as it: cryptocurrency. You might even be under the assumption that the two terms mean the same thing and are essentially interchangeable.

There is actually a distinction between Bitcoin and cryptocurrency, and it is an important one to make, especially considering what the future seems to hold for both, which is mass acceptance and cultural saturation. In short, Bitcoin is just one of many types of cryptocurrency, but it is crucial for potential adopters of these coins, or even investors in them, to figure out the finer points of the distinction. Or maybe you would just like to invest in Bitcoin and know nothing more than that, in which a reliable trading tool like Bitcoin Trader System can really help you out. If you do want to dig deeper, however, here are a few basics about the two terms to help you out.

1. Bitcoin as The First Cryptocurrency

Bitcoin essentially was the invention that created the need for the term cryptocurrency. After all, Bitcoin is just that, a kind of currency that can operate digitally thanks to a cryptographic process that validates all transactions. Fiat money requires a third party to facilitate those transactions, and that adds fees and hassles to the process. Bitcoin removes those as a way of paying or receiving payments.

2. The Common Technology

Bitcoin works because a technology is known as the blockchain. Without an intricate discussion of how the blockchain works, it is important to understand that other cryptocurrencies can be created using it. And that is where the other coins, which make up the whole of cryptocurrency, originate.

3. Expanding On Bitcoin

The other cryptocurrencies available generally do one of two things. On the one hand, there are crypto coins that do essentially the same function of Bitcoin, which is to facilitate payments. Then there are the cryptocurrency coins which are used to fund other initiatives that go far beyond paying money. These initiatives are limited only by the imagination, but they hold in common the ability to validate processes without a third party overseeing everything.
Once you begin to understand how Bitcoin functions in relation to other cryptocurrencies, and vice versa, you can start to profit from them both. And that’s definitely worth a little terminology lesson.

Join the discussion