In the last few years, the use of digital currency and digital wallets has spread on a large scale and the increasing popularity of cryptocurrencies has also led to the concept of virtual currency and virtual wallet. But the quicker all these things have happened, the more confusion has spread.
In the last decade, there has been a digital revolution in the monetary system. Especially the use of digital currency and digital wallets has started spreading on a very large scale. Especially in the lockdown imposed after the outbreak of Kovid-19, people had to adopt digital wallets and digital transactions on an even larger scale. And now with the increasing popularity of cryptocurrencies, the concept of virtual currency and virtual wallet has also come. But all these things have happened so quickly, a little confusion has definitely spread.
People started using digital wallets to hold both digital currency and cryptocurrency, and people often refer to cryptocurrencies as digital currency, but there is a difference between the two.
1. Digital Currency vs Digital Coin
Digital currency is the electronic form of government flat currency i.e. Rupee, Dollar. Digital currency is used to make contactless payments, such as when you send money from your bank account to someone else's bank account or using a payment app on your phone, you are in flat money. are doing transactions, but only the electronic form of flat money is called digital currency. When you withdraw this money from an ATM, it becomes cash.
But cryptocurrency is a virtual currency, it has no physical form, you cannot touch it. Its value is in the price assigned to it. These are also called digital coins. There are many other digital coins in the crypto ecosystem like bitcoin, ether and dodgecoin. These coins are generated through online mining on Hi-Fi computers and there is no government regulation in most countries. They work on advanced blockchain technology and can say that they regulate themselves.
2. Security and use of both
Digital currency does not require encryption, but yes, users have to protect their digital wallets i.e. banking apps or payment apps through strong passwords. Apart from this, the debit card, credit card have to be protected through password. Digital currency can be used through any available online medium and for everything that requires cash.
At the same time, cryptocurrencies require very strong and complex encryption for security. To trade in cryptocurrency or to buy and sell it, first of all you will need to have a bank account and digital currency. After that you have to open a trading account on any crypto exchange. From there you have to buy cryptocurrency from digital currency, after that you will start investing in cryptocurrency.
If we talk about its use, then the use of cryptocurrency is not widespread yet. This online currency has not been adopted in the offline world. However, many companies have started taking payments in crypto. At the same time, the Reserve Bank of India itself has also said that it will bring its own cryptocurrency in a phased manner.
3. Regulation of Digital Currency and Cryptocurrencies
As we have said earlier, digital currency is the only electronic form of flat money, so its regulation is also looked after by the same institutions which look after the regulation of flat currency. Flat currency has a fixed regulatory body, which makes monetary policies and controls the monetary system. In India, the rules of rupee are seen by the Reserve Bank, while the transaction of digital currency is looked after by the concerned authority.
But at the same time, cryptocurrency remains on a decentralized system, that is, it does not have a single regulatory point from which it is controlled or rules and regulations are enforced. It is not regulated by any one organization. Everyone can see all the transactions that take place in the crypto market. For this, there is a public ledger, which is available to everyone anywhere.
4. Stability of both
Digital currency generally remains stable. There is slight fluctuation in the currency, due to which there is no sudden storm in the market. If it has been recognized worldwide from above, then there is no problem in its transaction. At the same time, the cryptocurrency market is subject to a lot of volatility. There is a lot of uncertainty here. Anyway crypto is very new right now. Uncertainty and volatility are very common in a new market.
5. Transparency
The system of digital currency or flat currency is very private. The information about its transaction remains with the bus sender, receiver and banking authority. At the same time, everyone is aware of the transactions happening in the cryptocurrency market. All the transactions are recorded in the Public Ledger. This maintains transparency in the system.
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