The Difference Between Cryptocurrency and Digital Currency

Cryptocurrency and digital currency have been used on most occasions, interchangeably. What most don't know is the two words are different from each other. They stand for two closely related but varying meanings.

Why is that? How are they different from each other?

The whole purpose of this article is to explain the difference between the two often mistaken to mean one thing.

It’s time to dive in:

What is Digital Currency?

The digital currency as the name suggests is money that’s in digital form. it’s an intangible currency that holds value and can be used just like tangible cash.

A digital currency is often centralized meaning: there’s a central authority that controls it. The country’s central banks and the governments are able to manipulate and state how it will be used. in short, the total control of the digital currency solely lies on the government and the central banks.

If you’ve ever used a credit card or a debit card then you already have experienced how digital currencies work. You don’t have to carry it with you since it's already safe and secure somewhere in your account.

All you need to do is use your card to make payments, and the money spent will automatically deduct from your account.

The great thing about using digital currency is you don't need to carry solid cash everywhere you go. Also, unlike cryptocurrencies (looking at this in a while) it’s less volatile and this makes it almost stable.

What is Cryptocurrency?

Unlike digital currency, a cryptocurrency has no central authority controlling it. It’s considered trustless, permissionless, and decentralized. No one — not even the banks or the government — has any say in running cryptocurrencies.

It often runs in a disruptive technology known as the blockchain. The name “crypto” in cryptocurrency came from the whole process of how blockchain tech works.

Cryptography is one of the processes used to secure transactions within the blockchain, hence the name cryptocurrency.

However, a cryptocurrency can be a digital currency. This sounds counter-intuitive, right?

Here’s why:

There are some cryptos like Bitcoin, Ethereum, Litecoin, and Dogecoin that are mostly used as payment. They pack some great value in them. for example Bitcoin.

An FYI: Ripple (XRP) is NOT a cryptocurrency (this one is a topic for another day).

A flipside of using cryptocurrencies is they’re highly volatile. Compared to digital currencies, they are massively unstable and can drastically decrease their initial value in seconds. That’s why when dealing with cryptos, you should have this in mind.

Conclusion

Both crypto and digital currency have value, and all of them are digital in nature.

One thing to note nevertheless is cryptocurrencies can be considered as a digital currency, but digital currencies can’t be considered as a cryptocurrency. Do you get it? It’s like saying bananas are fruits, but not all fruits are bananas. Hope you’re getting the message.

PS: You might be interested in Ethereum Price Prediction. Click here to know what will happen.