Some of the biggest news about cryptocurrency relate to Elon Musk’s tweets. The billionaire has a way of swaying the marketing with one 280-character (previously 140-character) tweet.
But while we’re on the topic of crypto, did you know that digital currency and cryptocurrency aren’t the same? If you’re surprised, you’re not alone.
So, let’s get into the digital currency vs. cryptocurrency debate to see what the differences are!
What Is Digital Currency?
Digital currency is a balance or a record of currency notes and coins stored in a digital wallet. At any time, you can transform digital currency into cash by making a withdrawal from an ATM or bank.
Digital currency is intangible cash. There is a contactless transaction flow between the two. It also goes by digital money, electronic money, and electronic currency.
If you use an online banking system, you have experience with digital currency. You can ask your bank to give you a digital currency guide when you have specific questions about your account.
What Is Cryptocurrency?
Conversely, cryptocurrency is an encrypted form of digital currency. Cryptocurrencies have different names because different companies launched them into the market. Some common examples include:
- Bitcoin
- Dogecoin
- Ethereum (Ether)
- Litecoin
- Polkadot
Cryptocurrencies use advanced blockchain technology to provide smooth transition flows and an impenetrable ledger. However, the market is still highly volatile in the global investment market.
Primary Differences
The most significant difference between digital currency and cryptocurrency occurs in the digital wallet. This is because not all digital currency uses encryption. Cryptos use a high level of encryption.
You need to open a bank account to get digital currency, which may not have cybersecurity. To get cryptocurrency, you need to open an account in a forum with a cybersecurity system to protect the coins from a cyberattack.
Another difference is the use of ATMs. If you have digital currency in your account, you can withdrawal money from the ATM. Before, this wasn’t possible with cryptocurrency.
However, this is changing! Check out www.bytefederal.com to learn more about Bitcoin ATMs and how to use them.
Additionally, there are hefty fees for transferring digital currency between digital wallets. Cryptocurrencies don’t have any transaction fees.
As mentioned, the crypto market is highly volatile. There are many risks involved. This is because it operates in a decentralized system. There is no third party that has authority over investors.
But digital currency is almost always stable because it operates on the global market and has a centralized authority. Reserve Banks control the banking systems and monitor transaction flows.
Yet, there is much more transparency with cryptocurrency than with digital currency. The receiver or sender of digital currency gains information related to the transaction. This includes:
- Amount
- Bank
- Time
- Date
But transparency is the cornerstone of cryptocurrencies. Thus, all past and current transitions are available for the parties to see.
Digital Currency vs. Cryptocurrency
Although they are similar to each other, the differences are apparent when it comes to digital currency vs. cryptocurrency. Digital currency relates to traditional banking. Cryptocurrency relates to a new form of money coming out of blockchain technology.
For more digital currency tips or to find a cryptocurrency guide, make sure you browse the rest of the blog.