Bitcoin is the iPhone, Cryptocurrencies are Mobile Phones and Crypto Assets are Electronic Devices
When delving into the subject of crypto assets, it is important to first understand what exactly these assets are. In order to do so, we can use a simple analogy wherein Bitcoin can be thought of as the iPhone (the premier asset class in its category). Similarly, cryptocurrencies can be viewed as mobile phone devices whereas crypto assets can be seen as electronic gadgets.
Now, with this analogy in mind, let's get started.
As we all know, Bitcoin is the world’s premier cryptocurrency simply because it was the first alt-asset to enter the digital market sector. Before there was Bitcoin, the digital world was one where data could be copied using simple image functions. For example, it was possible to replicate the bitcode (series of 0’s and 1’s) that lay at the core of all digital material using a simple copy and paste function. However, with Bitcoin and its use of advanced cryptographic technology, such actions were pretty much eliminated from the picture completely.
To further understand this, we need to look at the core properties of crypto assets which make them stand out from other forms of media:
- Irreplaceability: Straight of the bat we can see that Bitcoin cannot be replaced since it is comprised of a set digital code that can exist independently.
- Indestructiblity: Since the core code of Bitcoin is digitally configured, it cannot be destructed.
Owing to these properties, we can see that Bitcoin is quite fungible and is perfect for use within the context of “conventional market currencies”.
Digital Assets Pre-Bitcoin
Another question that a lot of people often ask is whether there were any digital assets that existed before Bitcoin. The answer is yes, but not in the form that we are accustomed to now.
The finance industry has conventionally used mechanisms where it has maintained 92% of all its money digitally. However, since there are so many manual operations involved with the execution, clearing and settlement of these assets, the maintenance costs of these alt-mediums becomes quite expensive.
On the other hand, Bitcoin makes use of a framework which helps eliminate such unwarranted costs— thereby making it a highly suitable technology for moving money in the cheapest fashion possible.
Blockchain— The Technology Underlying Bitcoin
At this point, it is also worth talking about the underlying framework of Bitcoin, Blockchain. While previously it was extremely difficult to maintain an asset class such as ETH, BTC, XRP using conventional avenues, with the power of blockchain technology, such virtual assets can be governed with relative ease.
In this regard, some of the simplest use cases within this domain include physical assets. Unlike crypto assets, these physical entities can't simply be replicated digitally. However, with the rise of blockchain, it is now possible to represent a physical asset in the digital world.
Referring to Bitcoin simply as digital cash does not do justice to what the technology actually represents. In the future, Bitcoin and other crypto assets will present to us a host of novel use cases just like the internet has done (ever since its advent).