There’s A Difference Between Cryptocurrency And Digital Currency

Many have been led to believe that Digital Currency is another term that can be used when referring to Cryptocurrency currency.

Digital currency is the electronic model of currency notes and coins that can be stored in the digital wallet. The digital currency can be transformed into cash in hand, if necessary by withdrawing cash from any ATM or bank. It is intangible cash with an open-source contactless transaction flow between two parties.

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Cryptocurrency, on the other hand, is the encrypted form of digital currency, which is still highly volatile in the global investment market.

The cryptocurrency has different names with respective companies who launched it in the market— Bitcoin, Ethereum, Dogecoin, and many more. It is created with the help of advanced blockchain technology to maintain smooth transaction flow.

In 1990, the first electronic cash company DigiCash was founded in Amsterdam, however, the company failed due to bankruptcy. Although the impact wasn’t too severe, the discovery of digital currency amazed millions of citizens. That’s how the term Digital Currency came into the world denominated into its own units.

Recently, The Central Bank of Kenya proposes introducing a digital currency in the country in a move that could ease cross-border payments and complement mobile money in the local market.

The proposed Central Bank Digital Currency (CBDC) will be a virtual version of the shilling, exchangeable on a one-to-one basis with physical cash.

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The introduction of CBDC has been under debate globally for the last few years, with some countries racing ahead to roll them out, such as Nigeria and The Bahamas.

Here are five major differences between digital currency and cryptocurrency.

1 – Centralisation

The biggest difference between digital currency and cryptocurrency is the question of who has control over the monetary value of your coins.

Cryptocurrency, on the other hand, follows a transparent procedure right from mining to ownership to transfer of crypto assets. Its value is also independent of central banking authorities and regional geopolitical problems.

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2 – Encryption

Once again, cryptocurrency trumps digital currency when it comes to encryption. Digital currencies are essentially e-cash that doesn’t need any special indigenous methods to encrypt them. Cryptocurrencies, on the other hand, are stored on a blockchain and the coins themselves are stored in ‘wallets’ that offer a much higher degree of cyber security.

Also, choosing the right cryptocurrency exchange that offers the best of security features and a wide range of currencies to transact with, is the primary requirement to transact using cryptos.

3 – Transparency

The biggest advocates for cryptocurrency will cite the transparency afforded by the platform. Every detail regarding cryptocurrency transactions is in the public domain thanks to the presence of a decentralised ledger that records all the blockchain details.

With digital currency, only the banking authorities along with the sender and receiver are involved in the transaction involved. In case of conflict over any asset, cryptocurrencies are easier to manage as the records are there for everyone involved to see, whereas digital currencies could involve bureaucratic hurdles and other problems in case of any conflict.

This decentralisation of data is, in fact, one of the driving forces leading to the adoption of cryptocurrencies across the world.

4 – Stability

Digital currency is usually stable and also relatively easy to manage, thanks to having wider acceptance in the global market.

Digital currency, being the fiat version of approved currency, is traded and understood by a vast majority of the population.

This, in turn, makes it more stable when compared to a new technology such as cryptocurrency that has started gaining attraction but isn’t mainstream yet.

Added to that, the price volatility of cryptocurrencies is another aspect that hampers its stability even as new tech and features mean that it is slowly but steadily gaining traction all around.

5 – Legality

Most countries are now taking a look at the legality and acceptance of cryptocurrencies. Since these aren’t backed by any governing body, most traditional frameworks don’t assign any value to them.

However, the swift rise in the number of depositors and various use cases of blockchain today and the upcoming metaverse, where the only method of payment remains cryptocurrencies, means that some sort of discussion around the legality of cryptocurrencies is bound to happen sooner than later.

For now, countries around the world are firm in backing their own fiat currencies.

6 – Transaction fee

There is a transaction fee with digital currency every time you use it while Crypto has no charges. Blockchain technology helps 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.


In other words, Digital currency is an umbrella term, comprising cryptocurrencies but the lines are definitely being blurred. Digital currencies, the electronic form of physical money, can be operated between different banking systems. Hence, globally acceptable.

Cryptocurrencies, on the other hand, can only be operated within the same blockchain that created them. This means that a Bitcoin cannot be converted into Ethereum, for example. Hence the limited use globally.

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