Introduction
Welcome to the era of Blockchain, a revolutionary technology that is redefining how we conceive and manage transactions and information security.
However, too often, I hear Bitcoin and Crypto being lumped together, concepts that are indeed indissolubly linked to this technology but have distinct roles and meanings. In this article, let’s explore the main characteristics of each, what unites them, and what sets them apart.
Birth of Blockchain
When did Blockchain come into existence? Many of you might confidently answer in 2008 by “Satoshi Nakamoto,” but not exactly. It is a particular type of DLT (Distributed Ledger Technology) conceived by Stuart Haber and W. Scott Stornetta as early as 1991.
Differences between DLT and Blockchain
A DLT (Distributed Ledger Technology) is a technology of digital records containing information characterized by decentralization and data replication across all nodes (computers) in the network.
Blockchain is a subset of the aforementioned technology, distinguished by a ledger where information and transactions are included and transmitted in blocks chained together through a number calculated by validators in the network, known as nonce.
Initially, the first project envisioned creating a network of cryptographically protected blocks where no one could tamper with the timestamp of documents. Over time, a distinction arose between DLTs like public but permissioned networks (or private networks) and blockchains as public and permissionless networks.
Understanding this helps explain why many companies claiming to belong to one category actually belong to the other. For many blockchain projects, companies might even use simple servers instead of using the term “blockchain” as a buzzword to attract capital, investors, and users.
Other companies and organizations, however, have been immediately interested in this technology for its security, immutability, efficiency, transparency, and rapid data sharing characteristics. Today, we see significant adoption of this innovation primarily in sectors such as:
- Supply Chain
- Banking
- Insurance
- Taxation
- IoT
What are Cryptos
Cryptos (or cryptocurrencies) are conceived to be used as digital currencies within a DLT system that can be decentralized and public, centralized and private, or a combination of these four characteristics. They are designed to be used as currency or tokens.
In the first case, the main purpose is the exchange of value between two or more participants in the same network for goods or services or as payment for the network’s use itself (as seen in Ethereum with its Ether).
In the second case, the purpose is to be used to approve changes or new proposals to the network, such as governance, or to be used like a token to avail various services.
Then there are tokens and cryptos born as meme coins, used as memes on the internet but take a completely different path due to their high speculation, becoming a kind of scratch card in the Web3 world. But that’s a whole different story that deserves a separate chapter.
What is Bitcoin
Now, let’s see what Bitcoin is and the ambitious role it aims to fulfill.
If many people get confused between Blockchain, Crypto, and Bitcoin, it’s because the underlying technology needed something practical and disruptive to support it. Thus, after various failed experiments, we see the birth of Bitcoin in 2008, an electronic peer-to-peer payment system developed by an individual (or more likely a group of people) under the pseudonym Satoshi Nakamoto.
It is based on Blockchain (with the capital B referring specifically to the Bitcoin blockchain) and is characterized by the absence of a central entity: no one knows who Satoshi Nakamoto is, and the protocol is open-source, decentralized, and permissionless.
Anyone can download the source code and run it on their node, controlling all transactions or funds (if allowed), validating them, and creating new Bitcoins. All of this enhances the network’s distribution. Moreover, thanks to these characteristics, it is impossible for any authority, governmental or otherwise, to block a transaction or data.
Today, it is recognized as a medium of exchange and store of value, a reputation that has increasingly gained traction, especially in recent years. What Bitcoin aims to do is restore value to individuals, giving each person the power to choose their own life and be directly accountable for the consequences of their choices.
In a world that increasingly absolves us of responsibility, Bitcoin provides the opportunity to be responsible and protagonists of our lives, starting with money, which in this world is what truly governs us, and reaching the freedom to make deeper and more personal life choices.
Conclusion
In this article, we briefly explored the differences between various terminologies commonly encountered in the Web3 world and embarked on a journey through blockchain, from its genesis to today. We observed the different destinations of each of the three terms often confused with each other and learned to understand their differences. Now, it is up to us to choose where we want to go and what we want to pursue.
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