Digital Currencies vs. Cryptocurrencies

June 15, 2020 by No Comments

Digital money exists only in digital form. It does not have a physical equivalent in the real world. Nevertheless, it has all the characteristics of traditional money. Just like the classic fiat money, you can acquire, transfer or exchange it for another currency. You can use it to pay for goods and services, such as mobile communications and internet, shop online and more. digital currency has no geographical or political boundaries; the transaction may be sent from anywhere and receive every point on the globe.

Actually, digital account and wallet can be considered as bank deposits.

What cryptocurrencies?

Cryptocurrencies various digital currencies.

Cryptocurrency is an asset that is used as a means of exchange. It is considered to be reliable because it is based on cryptography

One of the main goals of cryptography is communication and how to make them safe. It creates and analysis of algorithms and protocols so that no information is changed or disturbed during the conversation by third parties. Cryptography is a mixture of a large number of different sciences, with mathematics as a basis. This mathematical attached severity and reliability for algorithms and protocols.

Cryptocurrencies use Blockchain and book decentralization. This means that there is no supervisory authority to control all the action in the network. This comes at a waterhole all users.

What is the core difference between the two?

Although cryptocurrency is a type of digital currency, there are some fundamental differences.

Structure. centralized digital currency; No group of people and computers that regulate the state of transactions in the network. Cryptocurrencies decentralized, and regulations made by the majority.

Anonymity. digital currencies require user identification. You have to upload a photo of yourself and several documents issued by public authorities. Buying, investments and any other process with cryptocurrencies no need to require it. However, cryptocurrencies not completely anonymous. Although the address does not contain confidential information such as name, address, etc., each listed transaction, the sender and receiver are known to the public. Thus, all transactions are tracked.

Transparency. digital currencies are not transparent. You can not select the address wallet and see all of the money transfer. This information is confidential. Cryptocurrencies transparent. Everyone can see the transactions of each user, as all revenue streams are placed in the public chain.

manipulation of transactions. digital currencies have a central authority that deals with the issues. It can cancel or suspend a transaction at the request of participants or the authorities or on suspicion of fraud or money laundering. Cryptocurrencies regulated by the public. It’s highly unlikely that users will agree to changes in Blockchain, although there are few precedents like hack of DAO The. However, a significant amount of money, and the decision was not definite.

legal aspects. Most countries have some legal framework for digital currency, namely, Directive 2009/110 / EC in the EU, or Article 4A of the Uniform Commercial Code in the United States. We can not say the same thing about cryptocurrencies today. In most countries, their official status is not defined. A legal framework is only in the process.

What are the strengths and weaknesses of digital money?

Most of the differences can be regarded as advantages and disadvantages.

In a centralized system, there is a group of people responsible for the state of the whole system. If you make a mistake in the transaction, you can make a request to the company and dependent on a successful outcome. You can not do this in a decentralized system. On the other hand, a centralized network to save a lot of confidential information about the user.

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