There it is again! That smooth, subtle and seamless transition conflating cryptocurrencies, like bitcoin, with the blockchain technology. There are thousands of blog posts and news articles about bitcoin and cryptocurrencies, but the great majority fail to clearly distinguish between the technology and the digital currency that is created and transmitted by it. In a “Bitcoin Primer” published by Coinlab, “The term Bitcoin refers to both the digital unit of stored value and the peer-to-peer network of computers transmitting and validating transactions of these units.”
In another bitcoin primer, we read “Bitcoin is a decentralized peer-to-peer payments network and a virtual currency that essentially operates as online cash.”
To some degree, it is understandable. The original bitcoin white paper by Satoshi Nakamoto described a digital currency produced on a unique-to-bitcoin blockchain platform. They were as inseparable as Siamese twins and many bitcoin enthusiasts share exactly that view of the world.
Conflation creates confusion, however, particularly when discussing valuation. Allowing bitcoin to ride the coattails of the blockchain technology is misleading at best. A typical example of conflation comes from trying to compare the valuation of bitcoin to the franchise value of Mastercard and VISA. “Quite simply, Bitcoins have value because a growing group of people believe that the underlying Bitcoin technology has value.”
Bitcoin as “coin” does not equate to VISA as transmittal medium. Blockchain is the proper comparison. I think that might be what Warren Buffet and Jamie Dimon are getting at when they call bitcoin a fraud. They certainly are not referring to blockchain technology, which they know…