Is bitcoin about to break up with "cryptocurrency"?

Bitcoin has not broken up with cryptocurrency; it is simply adapting to its own role.

Written by: Thejaswini M A

Translated by: Block unicorn

You should know that I often talk about this issue—its philosophical foundations, its history, and the complex agreements humans have reached to assign value to a piece of paper or numbers on a screen. And every time we dig deeper, we always arrive at the same frustrating conclusion: its definition is constantly shifting beneath our feet.

For most of human history, people have used all sorts of things as money: salt, shells, livestock, precious metals, and pieces of paper with promises written on them. What exactly makes something "money," and what makes something simply "a valuable item," has never been clearly answered. We usually recognize it at a glance—unless we can't see it.

When Jack Dorsey tweeted "Bitcoin is not cryptocurrency," it touched on a sensitive point in this age-old debate. Because if Bitcoin isn't cryptocurrency, then what is it? And if cryptocurrency isn't Bitcoin, then what is it? More importantly: why does it matter?

The simplest explanation is that this is just tribalism. Extremists draw boundaries, and different factions take sides. This kind of boring argument makes normal people steer clear, because everyone involved seems a bit unhinged.

But I think there are other factors at play, some that go beyond tribal warfare. I believe the market is slowly and painfully realizing that Bitcoin and cryptocurrency have never been the same thing, even though they've coexisted in the same space for fifteen years. And the process of distinguishing them is not a breakup, but a specialization.

This distinction matters because specialization is not about conflict, but about function. The heart and lungs do not compete; they each perform different functions. If you try to make the heart also perform the function of breathing, you don't get a more efficient organism—you get a dead one.

The divergence between Bitcoin and cryptocurrency does not stem from hostility, but from fundamentally different design intentions. One aims to be money, the other tries to be everything else. And their success comes precisely from no longer trying to be each other.

This sounds like a war. But war is about victory, and this is just about distinction.

Dorsey's Tweet Was Just the Trigger

Why am I bringing this up again?

Listen, when Jack Dorsey tweeted "Bitcoin is not cryptocurrency," you have to stop and think about what's really happening here. He's the co-founder of Twitter and Square (now renamed Block), and his support for Bitcoin borders on fanaticism—he's even described the Bitcoin white paper as "poetry." He is a bona fide Bitcoin maximalist: he believes Bitcoin is the only digital asset that matters, and everything else is at best noise, at worst a scam.

So when Dorsey made this statement, it felt significant, like announcing a breakup. Maximalists cheered, while cryptocurrency developers scoffed. Everyone took sides.

On the other hand, the Czech Republic has just added Bitcoin to its national balance sheet. The scale is small, not enough to change the landscape. But this follows the U.S. establishing a strategic Bitcoin reserve in March, prompting 45 states to propose their own reserve bills, with Arizona, New Hampshire, and Texas already passing relevant legislation. Luxembourg's sovereign wealth fund has also fully shifted to Bitcoin investments.

They surveyed the entire digital asset space and ultimately chose one thing. Why?

For years, Bitcoin and "cryptocurrency" have been lumped together. Journalists write about the "cryptocurrency market," referring to everything from Bitcoin to Dogecoin to whatever new token launched this morning. Regulators talk about "digital assets," grouping them all together. Asset management firms allocate "crypto assets" in their portfolios. Industry insiders track "Bitcoin dominance" to measure Bitcoin's share of total crypto market cap, implying all cryptocurrencies are competing for the same pie.

But this framework is starting to unravel. Not because of ideology or tribalism, but because of how institutions actually treat these things, how markets actually price them, and how people actually use them.

When Fidelity releases research on Bitcoin, it doesn't call it a "crypto asset," but a "monetary asset." BlackRock describes it as "digital gold" and a "non-sovereign store of value." This isn't just marketing language—it's a fundamental classification that sets Bitcoin apart from all other assets. They don't compare Bitcoin to Ethereum like Coke to Pepsi; they treat Bitcoin as a separate asset class.

And all of this happened before Dorsey tweeted anything. Hardcore Bitcoin holders mentally separated Bitcoin from cryptocurrency years ago. They just didn't announce it in a press release.

What Does Bitcoin Want?

Bitcoin's design revolves around a few very clear priorities: security, predictability, decentralization, and monetary credibility. These traits make it hard to change. Bitcoin's development culture is famously conservative, with any upgrade requiring years of discussion. The whole system is designed to be difficult to modify.

You could call this a bug. Many people do. They point out that Bitcoin's ten-minute block time is laughably slow compared to some emerging blockchains. They also point out that Bitcoin can't run smart contracts, decentralized applications, or the advanced programmable features supported by Ethereum. All these criticisms are correct.

But look at it another way: Bitcoin isn't trying to do everything. It strives to do one thing extremely well—be a trustworthy, predictable, censorship-resistant currency.

Predictability is especially important. Bitcoin's total supply cap is 21 million, written into the protocol. Changing the cap would require massive computing power and likely a hard fork. For many, the 21 million cap defines Bitcoin and is its key distinction from fiat and other cryptocurrencies. So the cap remains unchanged, and has for 16 years. The same monetary policy, over and over, with no surprises.

Now look at almost every other cryptocurrency. Ethereum's mechanisms have changed dramatically. It shifted from proof-of-work (PoW) to proof-of-stake (PoS). It also plans to make ETH deflationary via ERC 1559. These are interesting technical decisions, but they run counter to predictability. Every change is a reminder that the rules could change again at any time.

Sure, I could tell you these changes make the system better. But you might ask, "better" in what way? If you're building a neutral, long-term store of value, changing the rules is a disadvantage, not an advantage. But if you're building a rapidly iterating platform for developers, changing the rules is great. You should change them often, ship fast, and experiment boldly.

The key is: the goals are different.

What Does Cryptocurrency Want?

The broader crypto ecosystem—everything outside of Bitcoin—looks more like a technology sector than a monetary system. It pursues speed, programmability, and innovation. New layer-2 scaling solutions appear every few months. There's decentralized finance, including lending protocols, derivatives, and liquidity mining. There's decentralized physical infrastructure. There are games. There are NFTs. And there are all sorts of things that may appear in the future.

The pace is extremely fast, cycles are extremely short, and ambitions are huge.

Crypto operates much like Silicon Valley. Venture capital pours in. Founders raise money, launch products, pivot if things go wrong, and launch again. Some projects achieve massive success, but most fail. There are hype cycles and crashes, and every quarter brings a new narrative. After DeFi Summer came the NFT boom, then the Layer 2 boom, and now whatever is happening next.

Monetary systems don't work this way. You don't want the money supply to change based on market trends. You don't want foundation members voting on whether to change the issuance schedule. You don't want the unit of account to iterate frequently.

So crypto and Bitcoin play different roles. Crypto wants to become a tech industry, while Bitcoin wants to be money. These are not competing visions, but different roles within the same economic system.

Why This Looks Like a Breakup

From the outside, this split looks very hostile. Bitcoin maximalists dismiss other cryptocurrencies as scams or distractions. They'll tell you that every crypto besides Bitcoin is either a security, a cumbersome centralized database, or a solution in search of a problem. Meanwhile, crypto developers see Bitcoin as inflexible and outdated. They point out Bitcoin's limited functionality and think maximalists are stuck in 2009.

The market treats them very differently, too. Bitcoin has its own cycles, its own trajectory, and its own institutional buyers. When MicroStrategy (sorry, "Strategy") spends billions buying Bitcoin, they don't also buy some Ethereum for diversification. When El Salvador legalized Bitcoin, they didn't include the top ten cryptocurrencies by market cap.

Regulators are also increasingly distinguishing between these tokens. Bitcoin is usually treated as a commodity. Most other tokens are in a gray area, with their status as securities depending on how they're issued and controlled. This leads to different regulatory frameworks, compliance requirements, and risk profiles.

So yes, it looks like a breakup. Different treatment, different communities, different use cases.

But what if this separation isn't hostile? What if they're just doing different things?

Asymmetric Dependency

Crypto needs Bitcoin far more than Bitcoin needs crypto.

Bitcoin gives legitimacy to the entire space. It's the entry point for institutional investors, the reference asset for new users, and the benchmark for all digital assets. When people talk about "blockchain technology," they're really referring to what Bitcoin pioneered. Regulators, when crafting digital asset regulations, start with Bitcoin and then consider the differences among other assets.

Bitcoin also determines liquidity cycles. Bull markets usually start with Bitcoin. Money flows into Bitcoin first, then moves to riskier crypto assets. This pattern has repeated for multiple cycles. Without Bitcoin's liquidity and market recognition, the structural weaknesses of the entire crypto market would be much more apparent.

Bitcoin acts as the reserve asset for crypto. Even as these ecosystems become more distinct, Bitcoin remains the dominant asset for large-scale settlement, long-term storage, and cross-border value transfer. It's the closest thing to digital gold.

The reverse is not true. Bitcoin doesn't need crypto innovation. It doesn't need smart contracts, DeFi, NFTs, or anything else. Bitcoin can quietly sit there, slowly process transactions, maintain its monetary policy, and stay true to its nature. That's the key.

This creates an interesting dynamic. Crypto revolves around Bitcoin. Bitcoin is like the sun. The planets can spin wildly, try new things, and collide with each other, but the center of gravity never changes.

The Real Problem

If Bitcoin wants to be money, it faces a problem: people simply don't spend it.

Every Bitcoin holder knows the story of Laszlo's pizza. This story does something to your brain. It makes you afraid to spend Bitcoin—what if it goes up in price? What if the pizza you bought becomes the next billion-dollar pizza?

This isn't just an early adopter quirk; it's basic human nature. When you hold an appreciating asset, you don't spend it—you hoard it. You spend your worst-performing asset first, and save the best-performing one for last. This is called Gresham's Law: bad money drives out good. If some of your currencies might appreciate 100% next year and some definitely won't, you'll spend the one that won't appreciate and save the one that might.

So, Bitcoin is too successful as a store of value, making it a poor medium of exchange. People see it as digital gold because it really is like gold: scarce, valuable, and you absolutely don't want to use it to buy coffee.

There's also the unit of account problem. Money should have three functions: store of value, medium of exchange, and unit of account. Bitcoin does well as a store of value, but poorly as a unit of account. And the real issue is the unit of account.

No one prices things in Bitcoin. Salaries are paid in dollars, euros, or rupees. Rent is paid in fiat. Company accounting is done in fiat. Even tickets to Bitcoin conferences are usually priced in dollars. You might be able to pay with Bitcoin, but the price is set in fiat first, then converted.

Why? Because Bitcoin is too volatile to price things directly. You can't walk into a coffee shop and see a sign that says "Coffee: 0.0001 BTC," because tomorrow that number might be 0.00008 BTC or 0.00015 BTC, depending on overnight market moves. A currency not used for pricing goods can't serve as a medium of exchange. It can only be an asset you swap for real money before making a purchase.

Even when merchants "accept Bitcoin," what actually happens is more telling: Bitcoin is instantly converted to fiat at the point of sale. The merchant receives dollars or euros, not Bitcoin. So you're really just using Bitcoin as an unnecessary middleman—converting your appreciating asset into the money you could have used directly.

In a few specific scenarios, this logic holds. If you're in Turkey, Venezuela, or Argentina, and local inflation outpaces Bitcoin's volatility, then Bitcoin does become the more stable choice. But that doesn't mean Bitcoin is good money—it just means fiat is terrible money in those places.

This is why, when Jack Dorsey's Cash App announced support for stablecoins this week, they chose to build on Solana, not Bitcoin. For Bitcoin maximalists, this is like a vegetarian opening a steakhouse. But if you understand the real use case for each thing, it makes perfect sense.

Stablecoins are the money people actually use to pay. They're pegged to the dollar, so there's no risk like with Bitcoin. No one worries their USDC will go up 10x next year, so they're happy to spend it. Stablecoins may be boring, but they're stable and genuinely convenient for moving money.

Bitcoin is the tool people use to store value. It's scarce, hard to inflate, and not controlled by any government. But you wouldn't use your 401(k) retirement account to buy coffee, and you probably shouldn't use your Bitcoin either.

The Layered Model

So maybe the digital asset economy isn't splitting apart, but self-organizing into different layers, each playing to its strengths:

Layer 1: Bitcoin—the monetary base layer

A non-sovereign store of value, with predictable issuance and global neutrality. It grows slowly and steadily, designed to last for decades. Institutions treat it as digital gold. People hoard it. That's normal. That's the point.

Layer 2: Stablecoins—the medium of exchange layer

Digital versions of fiat money, actually used by people. They're fast, cheap, but boring. They don't appreciate, so you don't feel guilty spending them. They exist on various blockchains, including Bitcoin's Lightning Network, as well as Ethereum, Solana, Tron, etc., depending on which chain best fits the use case.

Layer 3: Crypto networks—the application layer

Platforms enabling financial markets, decentralized applications, tokenized assets, and whatever comes next. This is where innovation happens. This is the tech industry. It's fast-moving, VC-backed, sometimes silly, but occasionally brilliant.

This model mirrors how the traditional economy works. Gold is the store of value, fiat is the medium of exchange, and financial markets and tech companies build applications on top. No one expects gold to be both a payment channel and a smart contract platform. Different things serve different functions.

These are not competing investment targets.

Bitcoin hasn't broken up with crypto; it's just adapting to its role. Crypto is doing the same. And stablecoins fill the gap that neither can solve.

It's not a breakup, it's specialization.

And this specialization is the cornerstone of the future architecture of digital currency—Bitcoin provides the foundation for a complex, diverse, and rapidly evolving ecosystem.

The question was never about whether Bitcoin or crypto would win. The real question is how they can coexist in a system where each plays to its strengths and works together.

This system is gradually taking shape. The "breakup narrative" completely misses the point.