Digital Currency Vs Cryptocurrency: Today, every crypto investor believes that taxing crypto in any form means it will not be banned. But, even this does not give it legal validity. It also remains to be seen what kind of action the government decides to take on cryptocurrencies in the country. As I am also hearing that rbi is going to launch its own digital currency very soon, so today in this post we are going to know the main difference between digital currency and crypto currency that will help you to know more about the both digital currency & crypto.
The Finance Minister (Nirmala Sitharaman) also announced that the Reserve Bank of India (RBI) will soon bring its own digital currency, which will be called CBDC or Central Bank Digital Currency. RBI has been working on the digital currency for several months and according to Sitharaman, it will be introduced in the next financial year.
Digital Currency Vs Cryptocurrency
The digital currency is issued by the country’s central bank and is also recognized by the country’s government. So there is no danger. It can be used for purchases in the issuing country. On the other hand, cryptocurrency is highly volatile, as it is not subject to any regulation.
Digital currency can be used in contactless transactions between two parties. Like paying someone else electronically from your bank account. All online transactions involve digital currency, once you withdraw that money from a bank or ATM, that digital currency turns into liquid cash.
Cryptocurrencies, or digital coins, are a store of value that is protected by encryption. These digital coins are all privately owned and created and are not yet regulated in most countries.
The digital currency does not require encryption, but all users need to secure their digital wallets and banking apps with strong passwords and biometric authentication to reduce the chances of hacking and theft. The same applies to debit and credit cards which are the key to these digital currency transactions.
Cryptocurrencies are protected by strong encryption and to be able to trade in crypto, users must have a bank account with money and this digital currency can be exchanged through an online exchange so that Receive cryptocurrencies of the respective value.
When it comes to regulation, digital currencies will be backed by a central authority in India, which would be the RBI. The CBI regulates both liquid, cash and digital currency transactions. In the case of cryptocurrencies, it is a decentralized system and is not regulated by a central authority. However, all crypto transactions are recorded in a decentralized ledger that is available to all.
On the stability front, digital currencies are stable and easy to manage when it comes to transactions as they are widely accepted in the global market. On the other hand, crypto is very volatile and rates rise and fall almost regularly.
The details of digital currency transactions are available only to the people involved, the sender and receiver and the bank. The details of crypto transactions are available to the public through a decentralized ledger.