Bitcoin is not a cryptocurrency
You have probably seen Calvin Ayre stating “Bitcoin is not a cryptocurrency” on his twitter feed and getting plenty of sneers. Well, he is technically correct. Bitcoin (BSV) is not a cryptocurrency, it is a peer-to-peer electronic cash system, exactly as stated in the whitepaper. Nowhere in the whitepaper is cryptocurrency mentioned. So what is the difference?
The term cryptocurrency is defined as a digital currency using strong cryptography to secure itself. “crypto” short for cryptography, is the encryption of data. Bitcoin uses no encryption. Everything on the blockchain is in plain text and visible to anyone. The Bitcoin protocol uses digital signatures, but nothing is hidden by encryption. This is on purpose so transactions are traceable between one another. This transparency helps protect users and work well with law enforcement. Note that data stored on top of transactions can be encrypted, but that is not part of the base layer protocol.
Bitcoin is also not anonymous. It is pseudonymous in the way two people can send and receive payments with an acceptable level of privacy, but not the same level of privacy as cash. In Bitcoin your pseudo id is the bitcoin address where the transaction takes place. If that address is ever linked to your real identity, then every transaction can then be linked to you. It is designed this way on purpose. This makes Bitcoin extremely difficult, if not impossible, for criminal activity. The transactions are there forever, for anyone to see and investigate. There are many examples of criminals being traced down on the blockchain and apprehended. It is not a matter of if, but when they are caught.
Cryptocurrencies on the other hand, often blur the line between anonymity and digital cash. If transactions are blinded in secrecy, intentionally obfuscated, or data is encrypted, these are hallmark traits of crypto. Examples of crypto are Monero, Zcash, and Dash. These are the types of coins that criminals prefer. They do not work well within the bounds of law, and what I think will be their ultimate downfall.
BTC, the original ticker for Bitcoin, is no longer Bitcoin. It has derailed itself from the protocol outlined in the whitepaper. The artificial 1mb block size limit has created the “need” for the Lightning Network “solution”. However, LN is riddled with problems. It breaks the small-world network topology of Bitcoin, falling prey to man-in-the-middle attacks. It brings back mesh network topology with central points of failure. It breaks the reward/economic structure. LN steals the fees from miners instead of moving toward a fee market where fees outgrow subsidies. It can break the chain of signatures within the LN layers, allowing for crime and users to be scammed and losing their coins. In this sense, BTC has become a cryptocurrency and no longer Bitcoin.
Bitcoin BSV is the only protocol holding true to Satoshi’s original design. It is demonstrating it can scale to world-wide adoption, all while transaction fees are fractions of pennies and getting lower. Bitcoin is digital cash, not cryptocurrency. It is the future of money.