1.8Lesson 8 of 8
Bitcoin, crypto and blockchain
This lesson answers
- What is the difference between Bitcoin and crypto?
- What is a blockchain?
- Is Bitcoin the same as Ethereum?
- What is a stablecoin?
- What is an altcoin?
Bitcoin was the first cryptocurrency. Since 2009 thousands of others have been created, and "crypto" became the word for all of them together. They share some technology with Bitcoin but can work very differently, and this site is about Bitcoin only.
Three words that get mixed up
| Bitcoin | The network and its coin, often written BTC. Started in 2009, with a fixed supply and no company behind it. |
|---|---|
| Blockchain | The kind of record Bitcoin keeps: blocks of transactions, each linked to the one before. Other projects use the word for their own records, some of them run by a single company. |
| Crypto | The umbrella term for Bitcoin and every other coin or token. Coins other than bitcoin are sometimes called altcoins. |
How other coins differ
Many later coins were created by a company or foundation that kept a large share for itself at the start, and some can change their rules or create more coins when that group decides. Ethereum, the second-largest, is built to run small programs as well as payments, and its supply has no fixed limit.
Stablecoins are tokens meant to stay worth one dollar, or one euro. A company issues them and says it holds money or bonds to back each one. Most issuers can freeze coins at particular addresses, and do, often at the request of the police.
Three questions to ask about any coin
- Who can change its rules? For Bitcoin, nobody alone: see who runs Bitcoin.
- Who can create more of it? For Bitcoin, nobody: see how many bitcoin there are.
- Who can freeze it? For bitcoin in a wallet whose keys you hold, nobody. On an exchange, the exchange can.
The answers don't make a coin good or bad. They tell you who you are trusting when you hold it.
Check yourself
Practice, not a test. Think of your answer first, then reveal it.
1Is every blockchain like Bitcoin's?Reveal
No. Blockchain only describes the kind of record. Who controls it, who can add to it and how coins are created differ a lot from one to the next.
2Who can freeze a stablecoin?Reveal
Usually the company that issues it. Most stablecoin issuers can and do freeze coins at certain addresses.
3What three questions help compare any coin?Reveal
Who can change its rules, who can create more of it, and who can freeze it.
Sources
- Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (2008).
- Stablecoin freezes: the issuers' own published terms of use.