Digital Currency vs Cryptocurrency: Digital currency is an electronic form of fiat money issued by governments. Cryptocurrency is a store of value secured by encryption. Digital currencies are the key to a brighter future. They are used for contactless transactions between parties, like when you electronically transfer an amount from your bank account to someone else’s. Cryptocurrencies are store of value that is secured by encryption. The difference between digital and cryptocurrency is that cryptocurrencies are not issued by any government.
What is digital currency?
Digital currency is a form of electronic money that only exists in digital or virtual form on the internet. Unlike fiat currencies, it is not physical and can be sent and received with the help of devices such as smartphones, tablets, computers or other internet-connected devices. It is sometimes called “digital money,” “electronic money,” or “electronic currency.”
- Because digital currencies are only available in electronic form, they can only be used with computers or mobile devices.
- They are often the cheapest method for trading currencies, because digital currencies require no intermediary
- You can say, all cryptocurrencies are digital currencies, but not all digital currencies are cryptocurrencies.
- Cryptocurrencies are exchanged using consumer mood and psychological triggers in price fluctuation, whereas digital currencies are steady and traded with the markets.
What is cryptocurrency?
A cryptocurrency is a decentralized form of money. You send and receive it without any transaction fees and this means it fully peers to peer. Cryptocurrency has no central authority like banks or government to control its flow or to provide backup services. To date, more than 1,800 cryptocurrencies have been developed by developers. These include Bitcoin, Litecoin, Ethereum, Dash, Ripple, Monero, Neo, Cardano and more.
Digital Currency vs Cryptocurrency: The difference between digital currency and cryptocurrency
| Digital Currency | Cryptocurrency (Digital Coins) |
| Digital Currency is electronic form of fiat money issued by governments | cryptocurrency is a store of value secured by encryption |
Digital currency is the electronic form of fiat money issued by governments. They are used for contactless transactions between people, like when you electronically transfer an amount from your bank account to other people. When you pay from your bank account or digital wallet via an electronic transfer mechanism, this means you are using digital currency and when you withdraw money from an ATM, the digital currency is turned into liquid cash. | Cryptocurrencies is a store of value secured by encryption. They are often called as digital coins. There are several digital coins such as Bitcoin, Ether and Dogecoin. All these crypto coins are privately owned or created and are not regulated in most countries. These are created using advanced blockchain technology. |
Digital currency does not require encryption, but users need to secure their digital wallets with strong passwords to minimise the risk of theft, loss, or hacking. Users also need to secure their debit/credit cards with passwords protection. They can use any of these means to transact digital currency from their bank accounts. | Cryptocurrency is protected by strong encryption. To trade cryptocurrency, you need to first have a bank account and digital currency in it. You will have to exchange the digital currency via an online exchange to get cryptocurrency for the corresponding value. |
As digital currency is based on centralized system and supported by a centralized authority. | The cryptocurrency is based on a decentralized system and independent of any centralized regulation. |
| Digital currency is usually stable, and it is relatively easy to manage its transactions. | Cryptocurrency is highly volatile and just gaining traction and there are so many companies who have not yet started accepting payments with cryptocurrencies. |
Details of digital currency transactions are only available to the sender, receiver, and banking authorities. | All cryptocurrency transaction details are in the public domain by virtue of a decentralised ledger |
| The regulated or unregulated currency is available only in digital or electronic form. | A virtual currency that uses cryptography to secure and verify transactions as well as to manage and control the creation of new currency units. |
How both currencies are used
Cash is the physical currency in the form of paper notes, coins, or similar forms of currency. It is not digital in the sense of being stored on an electronic platform.
Cryptocurrency is another type of currency, which is not printed by governments or used for payment. Cryptocurrencies are secured by encryption. They can be bought and sold through an electronic platform.
How digital currencies are created, the government produces digital currency by providing its fiat currency to a certain public, as and when the demand for the same is high. This creates demand for the digital currency and the economy, then runs on it.
Conclusion
We have given you a deep explanation of what is a digital currency and what is cryptocurrency.
We have also explained the differences between digital and cryptocurrency. We hope you have understood the concepts well and will find this article helpful.
Click on the link to know the Tips on Finding the Best Credit Card Deals
