INSUBCONTINENT EXCLUSIVE:
With the advent of cryptocurrency, the use of digital wallets increased even furtherThe use of digital wallets flourished as technology
evolved in the past decade
Governments all over the world encouraged people to switch from traditional wallets to digital wallets as they were convenient in many ways
Their popularity peaked during the pandemic because of their contactless benefits
Then, with the advent of cryptocurrency, the use of digital wallets increased even further
All this happened quite rapidly for most people to keep up their pace and resulted in some confusion about these two types of
currencies.People began using digital wallets to hold both digital currency as well as cryptocurrency
And often we find them using the terms interchangeably
However, they differ.1) Digital Currency Vs Digital CoinsDigital currency refers to the electronic form of fiat money issued by governments
They are used for contactless transactions between parties, like when you make an electronic transfer of an amount from your bank account to
When you pay from your bank account or digital wallet, which stores value corresponding to the actual fiat money, via an electronic transfer
mechanism for a product or service, you are using digital currency
When you withdraw money from an ATM, the digital currency is turned into liquid cash.Cryptocurrency, on the other hand, is a store of value
They are often referred to as digital coins
There are several digital coins like Bitcoin, Ether and Dogecoin
All these crypto coins are privately owned or created and are not yet regulated in most countries
These are created using advanced blockchain technology.2) UsageDigital currency does not require encryption but users need to secure their
digital wallets (banking apps) with strong passwords to minimise the risk of theft or hacking
Users also need to secure their debit/credit cards with passwords
They can use any of these means to transact digital currency from their bank accounts.Cryptocurrency is protected by strong encryption
To trade cryptocurrency, you need to first have a bank account and digital currency in it
You will have to exchange the digital currency via an online exchange to get cryptocurrency for the corresponding value.3) Regulatory
AuthorityAs digital currency is the electronic form of fiat money, it is always backed by a centralised authority
In India, the Reserve Bank regulates the rupee and all digital currency transactions are monitored by authorities
The cryptocurrency is based on a decentralised system and independent of any centralised regulation
But all transactions are recorded in a decentralised ledger that is available to everyone to see.4) StabilityDigital currency is usually
stable and it is relatively easy to manage its transactions because of wider acceptance in the global market
Cryptocurrency is highly volatile and just gaining traction
Not many companies have started accepting payments in it.5) TransparencyDetails of digital currency transactions are only available to the
sender, receiver and banking authorities
All cryptocurrency transaction details are in the public domain by virtue of a decentralised ledger.
