Digital Currency Vs Cryptocurrency (Top 7 Differences)

Digital Currency Vs Cryptocurrency

Digital Currency Vs Cryptocurrency

What is Digital Currency?

Digital currency (digital money, electronic money or electronic currency) is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet. Types of digital currencies include cryptocurrency, virtual currency and central bank digital currency. Digital currency may be recorded on a distributed database on the internet, a centralized electronic computer database owned by a company or bank, within digital files or even on a stored-value card.

Digital currencies exhibit properties similar to traditional currencies, but generally do not have a physical form, unlike currencies with printed banknotes or minted coins. This lack of physical form allows nearly instantaneous transactions over the internet and removes the cost associated with distributing notes and coins. Usually not issued by a governmental body, virtual currencies are not considered a legal tender and they enable ownership transfer across governmental borders.

These types of currencies may be used to buy physical goods and services, but may also be restricted to certain communities such as for use inside an online game.

Digital money can either be centralized, where there is a central point of control over the money supply (for instance, a bank), or decentralized, where the control over the money supply is predetermined or agreed upon democratically.

What is Cryptocurrency?

A cryptocurrency, crypto-currency, or crypto is a binary data designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. Some crypto schemes use validators to maintain the cryptocurrency. In a proof-of-stake model, owners put up their tokens as collateral. In return, they get authority over the token in proportion to the amount they stake. Generally, these token stakers get additional ownership in the token over time via network fees, newly minted tokens or other such reward mechanisms. Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority.

Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency (CBDC). When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.

Bitcoin, first released as open-source software in 2009, is the first decentralized cryptocurrency. Since the release of bitcoin, many other cryptocurrencies have been created.


This is the primary major difference between a digital currency and cryptocurrency in the digital wallet. The digital currency is not at all encrypted while the cryptocurrency is highly encrypted. In digital currency, one needs to open an account without any security – at any time your bank account can get hacked and you may lose all the existing cash. But in cryptocurrency, one needs to open an account in a forum with a cybersecurity system to protect all Bitcoins and Dogecoins from severe cyberattack.

Current Rate

The current rate of digital currency is almost constant and easy to deal with in the global market. There is no need for extensive research before dealing with any kind of transaction. But in the case of cryptocurrency, the market is highly volatile. It consists of potential risk without any extensive research before any investment or heavy transaction between two companies. There is a probability to experience a sudden change in the rate of cryptocurrency while completing a transaction.


There is a little bit of transparency in the information while dealing with digital currency. The receiver or sender of digital currency will only get the information related to the transaction process— amount, bank, time, and date. But transparency is the most important feature of cryptocurrency. Blockchain technology provides the entire stream of conversation between the two parties regarding all transactions— past and current. All the private conversations are maintained with confidentiality only between the dealers and no one else can get access to it.


The digital currency has the centralized authority where the Reserve Banks control the entire banking system of the respective countries. Banks have the authority to closely monitor the transaction flow for everyone whether it is for a digital wallet or a physical wallet. In the case of cryptocurrency, it is a decentralized system where there is no presence of a third party to have authority over the investors.

Transaction fee

There is a hefty amount of transaction fee with digital currency every time there is payment through the digital wallet. But there is no system of transaction fee in dealing with cryptocurrencies. Blockchain technology helps to reduce the expense as well as no extra commission for the third party agents. Cryptocurrency is very useful for investors to deal with heavy transactions involving valuable assets.


Digital currency does not require encryption, but users need to secure their digital wallets (banking apps) with strong passwords to minimise the risk of theft or hacking. Users also need to secure their debit/credit cards with passwords. 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.


Digital currency is usually stable and it is relatively easy to manage its transactions because of wider acceptance in the global market. Cryptocurrency is highly volatile and just gaining traction. Not many companies have started accepting payments with cryptocurrencies.

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