In this digital era, our lives are revolving around electronic gadgets and systems. If you have an idea about the Crypto market, then both the term Digital currency and Bitcoin. Both are an electronic form of currency.
Do you think that both digital currencies and Bitcoins are the same? No, they are not the same. Though Bitcoin is called a digital currency, there is a lot of difference between them.
What Are Digital Currencies?
The term digital currency is used to imply a more comprehensive section. Whether it is a Cryptocurrency or a Virtual currency, any type of electronic money comes under the umbrella of digital currency. Have you also come across the term Cybercash or Digital money? Yes, both of them are other names of Digital currencies. Visit the bitcoin aussie app to know more about digital currency.
Unlike dollars or any other fiat currencies, it does not have any physical appearance or physical existence. It is available only in digital or electronic form. You need an electronic wallet for storing or spending your digital currencies. You will also get access to your Digital currencies through the designated network.Photo by David McBee from Pexels
The transactions of digital currencies do not need any intermediator. And as a result of it saves time and your money both at the same time. It allows you to make a transaction typically instant and changes minimal fees or sometimes no fees.
What Is Bitcoin Or Cryptocurrency?
From the earlier discussion about the digital currency, you get the idea that Cryptocurrency is a form of digital currency. The term Crypto in the name Cryptocurrency has its own meaning. To secure the whole network of Cryptocurrency, a lot of Cryptography techniques and encryption algorithms are used.
No trusted third party such as the central bank or any credit card company is not needed here, as it is a decentralized system. This system is based on Blockchain. With the help of public and private keys, peer-to-peer transfers take place in the case of Cryptocurrencies.
Now come to the name of the term Bitcoin. Bitcoin is a Cryptocurrency. Just after Cryptocurrency or Bitcoin was launched, it has become too popular. Now Bitcoin is used as a synonym of Cryptocurrency. With a price value of more than $40,000 by the first week of 2021, it is the most precious Cryptocurrency.
The Difference Between Digital Currencies and Bitcoins
I hope, after reading the information that is given so far, you get to know that Cryptocurrency is a form of digital currency. Not all digital currencies are Cryptocurrencies. But Cryptocurrency does not have any physical existence and is only present in a digital or electronic form. So, all Cryptocurrencies of Bitcoins are digital Currency.
Here we will discuss the differences between digital currency and Bitcoins or Cryptocurrency.
- Officially backed digital currencies are issued centrally and also supported by the central bank. Have you heard of digital Euros? Only a central Authority like ECB has the authority to issue digital Euro. But the scenario is different for the case of Bitcoin. The issuing process of Bitcoin is decentralized, and no government has the authority to regulate Bitcoins.
- As digital currency is centralized, the central bank can regulate digital currency production there is a chance of inflation. But the number of Bitcoins is fixed to 21 million. There is nothing called Bitcoin inflation.
- Digital currency is backed by the central banking system and regulated by its norms. Institutions or organizations back Bitcoin. But they do not have the authority to control the flow of Bitcoin. They only can create blocks for Bitcoins.
- If you convert digital currency into fiat cash, the currency’s value will be the same as the physical money and will not be affected by volatility. On the other hand, Bitcoin is much more volatile, and a conversion charge is also needed to pay while converting into Fiat cash.
Now you know that though Bitcoin is addressed as digital currency, they are not the same. The technology system behind these two electronic currencies is different. As a form of Cryptocurrency, Bitcoin is called digital currency.
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