Have you ever wondered what the differences between digital currency and cryptocurrencies are? “Hold on a second”, you say… “Digital currencies and cryptocurrencies aren’t the same thing?”. Nope, they are not!
Let’s pit digital currencies vs cryptocurrencies and see who comes out on top…
According to the European Central Bank’s 2015 “Virtual currency schemes – a further analysis” report, virtual currency is a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money. In a nutshell, digital currencies are another name for money used to pay for specific goods or services on the Internet.
As you can probably imagine, digital money is entirely digital, it doesn’t have a physical equivalent in the real world. But, it acts in the same way as physical, traditional – or fiat – money. You can receive, transfer and/or exchange digital currency for another currency. It can be used to pay for goods and services, in an online store, for example, and it has no geographical or political borders.
Some argue that the lines are now becoming blurred as we move toward a cashless society, stating that physical money that is used online, for banking and retail, etc. should be classed as digital currency.
Cryptocurrencies are a specific variant of digital currencies.
Cryptocurrencies are algorithm powered currency used as tokens in select online communities and backed by certain technologies, assets or projects. They are mostly used in peer-to-peer payments but are now increasingly used to pay for real-world goods and services.
Cryptocurrency is considered secure, reliable and trustworthy as it is based on cryptography. The art of writing or solving codes, cryptography is a mix of different sciences, with mathematics at its base.
Cryptocurrencies use Blockchain and a decentralized ledger, which means that no single individual or supervisory authority controls the actions in the network. It is pure decentralization, at its most glorious!
Though cryptocurrencies are a variant of digital currencies, there are some key differences between the two.
Right now, the same cannot be said about cryptocurrencies. In most countries, their official status is not defined.
However, this situation is constant flux and is being pushed by companies like CoinMetro. Our mantra is “Moving Crypto Forward” and we’re working hand-in-hand with regulators and governments to help them understand the nature of crypto and blockchain technology in a bid to create extensive and lasting regulations that will bring widespread transparency to the industry.
So, there you have it. Digital currency is an umbrella term, comprising cryptocurrencies but the lines are definitely being blurred. Hopefully, we cleared up any confusion you might have had before you started reading!
The struggle is real and we can’t manage it alone! Fortunately for us, we have an awesome community of followers and active users. If you’d like to join in and start trading crypto we have good news – you’re only one click away…
Thanks for reading. Until next time!
The CoinMetro Team