How Digital Currency is different from Bitcoin.
People often get into a muddled situation when talking about Digital Currency and Cryptocurrency and end up thinking they are the same.
But in Reality, the Answer is NO. There’s a difference.
Firstly, let’s understand what is Digital Currency and Cryptocurrency?
Digital currencies aka Virtual Currency are those currencies that do not have physical attributes and are only available in digital or electronic form. But one can turn digital currency into cash by withdrawing cash from a bank or ATM.
And Cryptocurrency is an encrypted form of digital currency. Cryptocurrencies use blockchain technology and don’t depend on financial institutions to verify transactions.
This peer-to-peer system enables anyone to send and receive payments. When an individual transfers cryptocurrency, every transaction is recorded in a public ledger.
Some of the popular Cryptocurrencies are Bitcoin, Ethereum, Litecoin.
How is Digital Currency different from Cryptocurrency?
Digital currency is not encrypted, and users are required to secure their digital wallets with strong passwords to minimize the risk of theft or hacking.
Users are also needed to secure their debit/credit cards with passwords.
Cryptocurrency is protected by strong encryption. To trade crypto, you need to have a bank account and digital currency in it. And to get cryptocurrency you would need to exchange the digital currency via an online exchange to acquire the crypto for the corresponding value.
As digital currency is an electronic form of money it is always backed by a centralized authority.
In India, the Reserve Bank regulates all digital currency transactions.
And, The cryptocurrency is based on a decentralized system and is independent of any centralized regulation. But all transactions are recorded in a decentralized ledger and are available for everyone to see.
Digital currency is highly stable. It is easy to manage its transactions because of wider acceptance in the market.
On the other hand, Crypto is highly volatile and just gaining attraction. Not many organizations have started accepting payments with cryptocurrencies.
Details of digital currency transactions are only available to the sender, receiver, and banking authorities. No one else can access them.
All cryptocurrency transaction details are in the public domain by virtue of a decentralized ledger and can be accessed by anyone.