In today’s fast-moving technologies, everything is shifting to the online world. Digital solutions are not only affecting traditional businesses but also new ones. When cryptocurrencies rose to fame, many people started to ask about the differences between Digital Currency and Cryptocurrency. In fact, they both are intangible and only appear on the interwebz. Despite some similarities in their digital presence, there are many factors that differentiate the two immensely. What is the difference between digital currencies and cryptocurrencies? Here’s your definite answer, Cryptoticker style 😉
1- Safety and Encryption
The primary difference between digital currencies and cryptocurrencies lies in the underlying technology behind the two. Digital Currencies are often not encrypted, while cryptocurrencies are encrypted in their nature. Users of digital currencies rely on the infrastructure that resides on the company’s servers. On the other hand, cryptocurrencies exist on their respective blockchain, which by nature is highly secured.
2- Market Value
When we talk about cryptocurrencies, we often bring up the subject of how volatile they are. Their prices change on a continuous basis because of demand and supply. On the other hand, digital currencies are usually less volatile, or even pegged to a certain traditional currency. That’s why investors usually tend to invest in cryptocurrencies rather than in digital currencies. Those guys want to profit from capital gains, which is basically the change in the price of the underlying asset.
3- Transparency and information
When dealing with digital currencies, users don’t have access to full information such as total transactions made on the same day, or the sender/receiver of each transaction. They often have little information such as transaction date/time, amount, and payment method. For cryptocurrency users, everything is transparent. They have access to all relevant data in a secure and private way.
One key element that differentiates digital currencies from cryptocurrencies is the nature of the infrastructure they both run on. Digital currencies are run through a centralized company or entity, while cryptocurrencies are decentralized by nature. This gives those companies absolute power in running, maintaining, and changing what happens with those digital currencies. Any mishap that happens to those companies falls on the users of the digital currencies. For cryptocurrencies, they run on a decentralized infrastructure, with no third-party involvement whatsoever.
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