If Bitcoin is not "Crypto Assets", how is it different?

Author: Bradley Peak, Source: Cointelegraph, Translated by: Shaw Jinse Finance

1. Bitcoin is not a “cryptocurrency”

A tweet from Jack Dorsey has reignited the old question: Is Bitcoin part of the “cryptocurrency” category, or does it stand alone?

On October 19, 2025, Jack Dorsey posted three words on the X platform: “Bitcoin is not a cryptocurrency.” This post quickly garnered attention on the platform and in media reports. It reflects his long-held belief that Bitcoin should be regarded as a currency with its own rules and history, and should not be categorized within the broader token market.

Dorsey believes that Bitcoin should belong to a separate category. It was created without a foundation and no pre-mining, and its governance is relatively conservative. The original intention of the Bitcoin network is for payments and savings, which is different from fast-developing smart contract platforms and application tokens that serve multiple use cases.

Let's analyze this argument.

To understand the reasons behind it, it is necessary to understand how the design, governance, and regulation of Bitcoin differ from other parts of the cryptocurrency world.

2. Monetary Policy and Issuance: Fixed Rules and Flexible Policies

From the start of its supply, Bitcoin's issuance follows a fixed schedule, while most other networks treat supply as an adjustable feature.

Bitcoin is issued in the form of block rewards, with a halving approximately every 210,000 blocks until the total supply reaches 21 million BTC. The fourth halving will occur in April 2024, at a block height of 840,000, when the reward will drop from 6.25 BTC to 3.125 BTC. Each halving makes miners more reliant on transaction fees and reduces dependence on newly issued Bitcoins.

Changing the issuance of Bitcoin requires users running nodes to reach an overwhelming social consensus, allowing investors to predict supply years in advance. This predictability remains a core part of its “store of value” appeal.

Most other networks view monetary policy as a design choice. Take Ethereum as an example: Ethereum Improvement Proposal (EIP) 1559 introduced a base fee burn mechanism that reduces net issuance when demand is high; the Merge update migrated the network to a Proof of Stake (PoS) mechanism, thereby reducing total issuance. These changes together create a supply model that dynamically adjusts based on network activity.

This flexibility can enhance user experience and enable new functionalities, while the rigidity of Bitcoin is meant to maintain monetary credibility.

3. Consensus and Security Budget: PoW Minimalism vs. PoS Upgrade Speed

The way blockchain ensures its own security will determine everything that follows. Bitcoin exchanges work for security, while PoS systems ensure security through stakes.

On the Bitcoin network, miners use energy to add blocks, while full nodes execute a set of small and conservative rules. Its scripting language is intentionally simple, rather than Turing complete. The fewer the components, the lower the chance of failure, which is why changes to the base layer are extremely rare and strictly limited.

As block rewards continue to halve, miners' income is gradually shifting from new coin issuance to transaction fees—the long-term “security budget” of Bitcoin. This raises some important future questions, such as how the incentive mechanism will be maintained during periods of low fees. It also indicates that the surge in activities driving up fees, along with the stable use of layers such as the Lightning Network, is crucial for miner economics.

Many crypto platforms, especially Ethereum, use the PoS mechanism. Validators lock up ETH to earn rewards through proposing and proving blocks, and they may face penalties for misconduct. This model enables faster upgrades: the 2022 merge (Merge) upgraded to PoS, the 2023 Shapella allowed withdrawals, and the 2024 EIP-4844 reduced the data costs for rollups.

Bitcoin prioritizes its underlying security, stability, and minimal changes, while most PoS networks emphasize faster upgrades and higher throughput.

4. Governance and Culture: “Rigidity and Optimization” in Practice

Who can change the rules, how fast can they do it, and how can safety be guaranteed? The original intention of Bitcoin's design is slow evolution, while application-centered blockchains focus more on speed and flexibility.

The original intention behind the design of Bitcoin is slow evolution. Proposals initially appeared in the form of Bitcoin Improvement Proposals and would only be advanced after extensive public discussion and broad support from developers, miners, and node operators. There is no on-chain voting or foundation to dominate decision-making. Upgrades are typically introduced in the form of soft forks to maintain compatibility with old nodes.

In 2021, the Taproot upgrade adopted a “fast trial” signaling mechanism, reaching lock-in in June and activating on November 14, 2021, at block 709632. This lengthy process allowed developers, miners, and node operators time to coordinate, reducing the risk of activation. This pace (few changes, much discussion) reflects what people refer to as Bitcoin's “rigidity.”

The smart contract platform takes the opposite approach. Ethereum introduces changes through the EIP process, following a stable release cycle – for example, withdrawals after the merge and the prototype Danks sharding, to reduce data costs.

Different goals, different rhythms: Bitcoin ensures the credibility of its currency through conservative revisions, while application-focused blockchains emphasize the introduction of new features and maintaining developer engagement.

5. Running at the Top Level: Payment Applications vs. General Applications

Bitcoin maintains a streamlined base layer: Unspent Transaction Outputs (UTXO) accounting, limited stack-based scripting (intentionally not Turing complete), and relatively simple other logic.

Most of the payment activity for Bitcoin is shifting to second-layer networks like the Lightning Network. It uses bidirectional channels and hash time-locked contracts (HTLC) to enable instant, low-fee payments without altering the underlying rules. Daily transactions occur off-chain, while settlements remain anchored on the main network.

The smart contract platform, on the other hand, takes the opposite approach. Ethereum supports rich, stateful contracts on its Layer 1 and encourages composability—decentralized finance (DeFi), non-fungible tokens (NFT), and on-chain games stacking on top of each other. This approach can accelerate the pace of experimentation but relies on a flexible and regularly upgraded base layer.

Bitcoin is still exploring the fringes. The Ordinals and Runes launched around the halving in 2024 have pushed fees to historic highs, increasing miner income and providing a real test for fee-driven security. Crucially, none of this has changed the monetary rules of Bitcoin or its minimalist underlying design. The model remains effective: keep the foundation stable while allowing new activities to develop on top of it or in parallel.

6. Market Structure and Its Implications: Bitcoin as a Distinct Category

Exchange-Traded Funds (ETF), options, and capital flow data indicate that institutions view Bitcoin differently from other cryptocurrency markets.

On January 10, 2024, the U.S. Securities and Exchange Commission (SEC) approved a rule change that allows exchanges to list and trade spot Bitcoin exchange-traded products (ETP). This decision brings Bitcoin into the mainstream market, including the New York Stock Exchange (NYSE), Arca, Nasdaq, and the Chicago Board Options Exchange (Cboe).

These are the platforms used by brokerages, registered investment advisors (RIAs), and pension funds. Regardless of how you refer to this asset class, retirement and wealth management platforms have now opened a dedicated channel for Bitcoin.

The market infrastructure is thus expanding. By the end of 2024, U.S. regulators have approved spot Bitcoin ETF options, and the Chicago Board Options Exchange (Cboe) has also launched index options linked to a basket of Bitcoin funds. In short, it utilizes tools that institutions are already familiar with for risk transfer and price discovery – while most tokens still lack this.

The fund flow data clearly demonstrates this shift. During 2024 and 2025, the subscription and redemption of new funds have become routine activities, and the dashboard will track assets and net flows. Investors are investing in Bitcoin through traditional channels rather than native cryptocurrency platforms.

The policy signals also point in the same direction. The U.S. derivatives regulators have long classified Bitcoin as a commodity. In 2025, staff from the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) noted that registered exchanges could provide trading convenience for certain spot commodity crypto products.

Overall, distribution channels, hedging tools, capital flow reports, and regulatory labels all provide strong evidence for Jack's argument that “Bitcoin is not a cryptocurrency.” The market has long classified it into different categories.