Bitcoin is a form of cryptocurrency. This is the main difference between bitcoin and cryptocurrency.
Generally speaking, the difference between Bitcoin and cryptocurrencies is not as clear to many people as it could be. This makes sense since crypto is a newer financial instrument, and its use cases are still being discovered. And yet understanding the difference between crypto and Bitcoin is important, especially if you are a nonprofit or payment processing organization looking to tap into digital currencies.
Firstly, let’s start by describing what a cryptocurrency is, and go from there.
What Is Cryptocurrency?
A cryptocurrency, also called "crypto," is a digital currency. But digital doesn’t only pertain to the fact that financial transactions occur in the digital space. After all, you can make a debit payment through a digital interface. Digital currency also means that it is an alternative currency that doesn’t rely on the regulation of governmental bodies or banks.
Cryptocurrencies use encryption techniques to ensure that transactions are secure. And without the oversight of a regulative body or authority, cryptocurrencies use a decentralized system to record transactions.
If you are new to the world of crypto financial transactions, you might not be familiar with the term “blockchain technology.” Essentially, a blockchain is a ledger that records and maintains all transactions across a peer-to-peer (p2p) network.
Participants from the United States and around the world can confirm the transactions they participate in without requiring oversight of governmental or other regulatory authorities. Instead, algorithms are used to maintain safety and control these monetary exchanges.
Further, cryptocurrencies have no physical form and exist solely in the digital space. There is no “exchange for cash” option, and tasks such as retrieving funds from an ATM are not possible. This means that only peer-to-peer networks that are participating in blockchain exchanges can make or receive transactions of cryptocurrency. Think of it as digital money.
So, how does Bitcoin fit into this?
What Is Bitcoin?
First and foremost, Bitcoin is a form of cryptocurrency.
A common misconception about Bitcoin is that it is a competitor of cryptocurrency. In reality, Bitcoin is the most widely-adopted cryptocurrency, but not the only one. There are other forms of cryptocurrency out there. If you own Bitcoin, you own a cryptocurrency. If you own a cryptocurrency, you may or may not own Bitcoin.
Cash, debit cards, and Venmo are all forms of currency transactions. In the same way, Ethereum, Bitcoin, and Dogecoin are all forms of cryptocurrencies. A Venmo transaction or an ATM withdrawal both rely on a regulated currency network. A Bitcoin or Ethereum transaction occurs in the digital space only.
Learn more about other cryptocurrencies here: What about other coins?
Therefore, Bitcoin is a form of cryptocurrency and is bound by the environment in which cryptocurrency operates, called a blockchain. Data is stored on a digital ledger, where all validated transactions are protected. Individuals can prove their ownership of crypto with their private keys.
So, why are the two so intertwined? The most common reason that Bitcoin and cryptocurrencies are conflated is that Bitcoin was the first cryptocurrency. That's why other cryptocurrencies are called "altcoins." Simply put, their popularity and innovation hit the scene at the same time. Because of this, people lumped them together without appreciating the true differences between Bitcoin and subsequent cryptocurrencies.
Learn more about what Bitcoin is here: What is Bitcoin and why do people use it?
What Are the Benefits of Bitcoin and Cryptocurrencies?
The largest benefit that users of cryptocurrencies will tout is their lack of regulation. This doesn’t mean that purchases are somehow “sneaky” or “unorthodox.” Rather, this pertains more to the fact that there are fewer regulatory fees when it comes to making a transaction.
This can be beneficial for businesses and individuals alike. Whether making a large purchase or donating to an organization, Bitcoin has established its place in this world as a viable payment system.
In the charitable space, donating cryptocurrencies represents a potential tax benefit. The IRS considers crypto an asset, similar to real estate. When donating crypto, philanthropists can avoid or minimize capital gains taxes associated with their crypto earnings. All while they support worthy, altruistic causes.
See What Makes Engiven The Most Simple And Secure Crypto Donation Solution
Engiven understands the benefits that come with Bitcoin and other cryptocurrencies. It has been an early adopter of the blockchain application. Their commitment to meeting or exceeding industry security and compliance benchmarks makes financial partnerships and crypto donations on their platform simple and safe. Engiven prioritizes ease of use and feels that crypto donations are an important step toward unlocking generosity for good.
Additionally, younger generations are increasingly turning their efforts toward digital operations of all sorts. Mixed with the fact that cryptocurrencies exist outside of “institutional” frameworks means that young people often identify with them. Donating to a world-changing cause through a p2p platform means less oversight and barriers to completing these donations. And this resonates strongly with young givers.
Understanding that there is a difference between cryptocurrency and Bitcoin is important. In fact, this is the first step in understanding the world of digital currency. However, what’s more important is knowing that you have options to donate that can better suit your needs.
Book a demo today and see what makes Engiven the most simple and secure crypto donation solution, and unlock crypto giving to support world-changing causes.