The word "crypto" conjures images of numerous digital coins and tokens, all vying for attention and value. As of this writing, there are estimated to be about 23,000 different cryptocurrencies.

Although there are differences between cryptocurrencies, there is a lot less difference than the leaders of those projects would have you believe. Bitcoin is fundamentally different from the numerous crypto tokens. Enthusiasts, scholars, and media pundits increasingly talk about them as separate concepts.

Knowing what sets bitcoin apart from crypto is critical for understanding the goals of each and navigating them accordingly.

Origins

Bitcoin is the first successful digital currency. It started as a digital asset for hobbyists but has grown into a global phenomenon with a market capitalization in the hundreds of billions of dollars. Its primary purpose is to serve as a system for digital money – an alternative to "fiat" money, or money issued by governments and central banks.

Since bitcoin was invented, numerous other developers re-used pieces of bitcoin technology to create their own cryptocurrencies. The teams building crypto projects often tout a special capabilities to attract interest and investment. Soon after bitcoin was invented, many engineers believed that they could improve upon it by tweaking the technology to adapt it to particular use cases like social media, file storage, finance, or gaming.

A decade ago, these ideas were perfectly rational, because bitcoin had not yet grown to the point that it was the clear winner. Today, however, bitcoin has been adopted by millions of people across the planet and is the most widely recognized form of digital money by far. It remains to be seen whether crypto will be viable over the long term. With the rate of failure of crypto projects, even major ones, being so high, it does not look good. Bitcoin, on the other hand, is the most resilient and secure computer network ever created by humankind.

Decentralization

In contrast to crypto, bitcoin is decentralized. That means that no entity, group, CEO, foundation, or government, can alter its protocol. Decentralization protects bitcoin from the kinds of corruption that crypto (and government money) allows, such as insiders printing money for themselves.

Many other cryptocurrencies have centralized structures, exposing investors to risks if those in power make ill-advised or malicious code alterations. Even cryptocurrencies that have some amount of decentralization are orders of magnitude less decentralized than bitcoin. Ethereum, for example, claims to be decentralized. However, its monetary policy (including the size of the money supply) is decided by elites at an opaque organization called the Ethereum Foundation.

Scarcity

Bitcoin's design introduces the concept of absolute scarcity to the world of money, something no other traditional financial system or asset, including gold, can claim. With a hard limit of 21 million bitcoins baked into the code that everyone on the network runs, no one can ever change the maximum number of bitcoins in circulation. This design choice is one of the core reasons for bitcoin's success, because it ensures that bitcoin remains scarce and inflation resistant.

Most crypto projects don't have a fixed supply, and insiders can change their issuance schedules at a whim. A lack of scarcity introduces inflationary pressures, uncertainty, and potentially diminishes the crypto's value over time.

Bitcoin's scarcity means that as demand for bitcoin increases, since more cannot be made to meet heightened demand, its purchasing power rises instead.

Consensus

How do we all decide which token is the real bitcoin? One of the many breakthrough inventions that made bitcoin possible is called Proof of Work. Essentially, Proof of Work is a way of running computations wherein the answer you get from that computation is only possible to obtain by expending electricity. That means that, if you have that answer, anyone who looks at it knows that you spent resources to get it. That is what bitcoin miners do – they expend resources to order transactions into blocks. If you want to check if your bitcoin is real, you can check to see if miners spent electricity to create it.

Because bitcoin depends on spending real-world resources, it cannot be corrupted or altered by simply changing the code. On the other hand, most crypto projects utilize alternative methods of achieving consensus. Ethereum, for example, uses Proof of Stake, where token owners "stake" their holdings to vote on transaction validity. Proof of Stake is a system where those people who control more tokens (capital) have more influence over the network. Instead of creating a neutral, fair system that improves upon traditional finance, Ethereum simply imitates it, with all its flaws and inequities.

Satoshi

One of the most intriguing aspects of bitcoin is its pseudonymous creator, Satoshi Nakamoto. After collaborating with other cypherpunks on its creation, releasing it, and testing it for a few months, Satoshi disappeared.

Foregoing fame and fortune, this act of selflessness ensured the project wouldn't be tied to a founder's personality or human flaws, and may well be one of the reasons bitcoin could flourish as a decentralized project. This act gave bitcoin an "immaculate conception" that crypto cannot replicate.

Other cryptocurrency projects are created and led by founders and organizations that have a public presence. Because crypto projects are inevitably associated with companies, management teams, and marketing strategies, they simply cannot fulfill the role of neutral money.

Stablecoins

Stablecoins are digital assets designed to have a "stable" value that is perfectly equal to fiat (government-issued) currencies. The largest stablecoins by market cap are Tether (USDT) and Circle (USDC).

Stablecoins combine the speed and efficiency of crypto with lower price volatility. Because they are pegged to a fiat unit (commonly the U.S. dollar) people can more easily use them as a short term store of value and medium of exchange. Stablecoins modernize payments and reduce the friction associated with traditional banking. Still, they are inherently tied to the mainstream financial system, and are only as stable as their underlying assets.

In contrast, rather than working within it, bitcoin challenges the existing monetary system for supremacy. Instead of merely incorporating blockchain technology into the current fiat system, bitcoin offers a fundamentally different vision of what money can be: decentralized, borderless, and free from the influence of central banks and governments.

Bitcoin’s limited supply differs from fiat currencies, which can be printed in unlimited quantities and distributed to political allies. As such, bitcoin challenges the fiat-based central banking model that has dominated the global economy for decades. Manipulation of the money supply is one of the key levers of power, and bitcoin completely neutralizes it.

Conclusion

In an age inundated with digital tokens and projects, it becomes crucial to discern the genuinely transformative technology from the transient. Bitcoin stands as an unprecedented invention, untethered from the myriad of other blockchain projects commonly referred to as "crypto." Unlike these projects, which often succumb to centralization and lack of genuine scarcity, bitcoin has set a gold standard for what digital, decentralized money can be. With its robust security, immutable supply limit, and wide-reaching network, it serves not just as a speculative asset but as a challenge to the established monetary systems of the world.

As we navigate the ever-expanding digital frontier, bitcoin remains the most resilient and revolutionary form of money, while other projects still have to prove their long-term viability. In separating the concept of bitcoin from the broader crypto landscape, we can better appreciate its unique attributes and its monumental contribution to how we conceive of and transact value.