{"id":29605,"date":"2023-10-13T23:00:48","date_gmt":"2023-10-14T06:00:48","guid":{"rendered":"https:\/\/www.advantagegold.com\/?p=29605"},"modified":"2023-10-13T23:00:48","modified_gmt":"2023-10-14T06:00:48","slug":"cryptocurrency-vs-digital-currency-whats-the-difference","status":"publish","type":"post","link":"https:\/\/www.advantagegold.com\/blog\/cryptocurrency-vs-digital-currency-whats-the-difference\/","title":{"rendered":"Cryptocurrency vs. Digital Currency: What&#8217;s the Difference?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Cryptocurrency and digital currency. Their names sound similar.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">They\u2019re both money that exists in cyberspace.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s logical to think there must not be any difference when comparing digital currency vs cryptocurrency. But that\u2019s far from the truth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While digital currency and cryptocurrency share some traits, they are vastly different and serve different purposes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We\u2019ll look at the properties of both and explore how we use cryptocurrency vs. digital currency in real-world applications.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The difference between cryptocurrency and digital currency may be greater than you think.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What Is Cryptocurrency?\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Cryptocurrency is one of many types of digital currency.<\/span> <span style=\"font-weight: 400;\">It is used as a method of payment or as a speculative investment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cryptos\u2014as cryptocurrencies are sometimes called\u2014are created (mined) using an encryption algorithm and work on a decentralized <a href=\"https:\/\/www.forbes.com\/advisor\/investing\/cryptocurrency\/what-is-blockchain\/\" target=\"_blank\" rel=\"noopener\">blockchain<\/a> network.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are hundreds of cryptocurrencies. Some of the most popular are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bitcoin<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Litecoin<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ethereum<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">XRP (Ripple)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Dogecoin\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">You hold coins in a virtual wallet that is either cloud-based or stored on your mobile device or computer.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many use cryptocurrencies as a form of payment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Coin holders privately transfer their coins directly to another wallet holder in exchange for goods or services.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many also purchase cryptocurrencies as a speculative investment tool.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With a <a href=\"https:\/\/coinmarketcap.com\/\" target=\"_blank\" rel=\"noopener\">combined global market cap of over $1 trillion<\/a>, cryptos often trade with robust volume.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some investors try to get in on the ground floor of a newly available crypto. They may hold it or cash out as the coin gains popularity and increases in value.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The crypto market can be quite volatile. There have been many fortunes made and lost betting on crypto.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What is Digital Currency?\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Digital currency is money that is exchanged, stored, and managed over the internet, in the cloud, or virtually on an app.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While all cryptocurrencies are digital currencies, all digital currencies are not cryptocurrencies.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The types of digital of digital currency include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cryptocurrency<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Virtual currency<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Central bank digital currency (CBDC)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Fiat-based digital currency<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Even if you\u2019re not a crypto enthusiast, you\u2019ve probably used digital currency without knowing it.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most of the world\u2019s money supply is managed by intermediaries\u2014primarily banks and financial institutions\u2014and held on computers. The banks hold their money with the Federal Reserve, and it is mostly accessed digitally. Most of us use digital currency every day.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The word fiat refers to currency not backed by tangible physical commodities like gold or silver. One example would be the dollar.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fiat-based digital currencies are funds accessed through things like debit cards. Funds move digitally when someone uses the card for goods and services.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Conversely, the value of an asset-backed account that isn\u2019t digital\u2014such as a <strong><a href=\"https:\/\/www.advantagegold.com\/2023\/06\/01\/what-is-a-gold-ira\/\">Gold IRA<\/a><\/strong> and <strong><a href=\"https:\/\/www.advantagegold.com\/2023\/06\/01\/what-is-a-silver-ira\/\">Silver IRA<\/a><\/strong>\u2014is pegged to the price of the underlying asset that backs it.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong><a href=\"https:\/\/www.advantagegold.com\/approved-precious-metals\/\">Physical gold and silver\u2014bars and coins<\/a><\/strong>\u2014determine the worth of the account.\u00a0\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Key Differences Between Digital Currency vs. Cryptocurrency\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">There really is no battle when it comes to digital currency vs. cryptocurrency.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While there is some overlap in usage, each has its distinct utility and rules.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Centralization vs. Decentralization\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Traditional, fiat-based digital currencies exist on a centralized platform.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Centralized chains employ banks, financial institutions, and governments as intermediaries between the parties involved.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The intermediaries control the inner workings and give permission to the trade. They also record the transactions and transfer the funds.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Digital currency networks are private. Only those given access can participate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The intermediary facilitates the transaction between the parties. The intermediary can decide what the parties can or can\u2019t execute.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Centralized networks are not anonymous. Each transaction attaches a plethora of personal information belonging to the sender and receiver.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Crypto blockchain is decentralized. It is public and anyone can participate. <\/span><span style=\"font-weight: 400;\">There is no one authority that controls the network.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Transactions are processed directly between two parties\u2014the sender and the receiver\u2014and do not require a middle man like a bank or credit union.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The cryptocurrency blockchain affords anonymity.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Any change in the blocks that make the chain have to be agreed upon by the participating parties. This system makes crypto difficult to alter or hack.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Technology and Infrastructure<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Cryptocurrencies are stored in a digital wallet. Each wallet is accessed by a private key.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If the private key is stolen or lost, it can\u2019t be recovered. The crypto assets can be moved by the current key holder or they are gone. In this circumstance, anonymity works against you.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Digital currencies typically access fiat currencies stored in a financial institution.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You are assigned a card and a password that gives you access to the account.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There is very little privacy with digital currency.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Digital currency transactions are identified by the account holder\u2019s personal information and information assigned by the institution.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If passwords are lost or stolen, the account holder can easily change them. Account activity can instantly be halted, and stolen funds can be replaced.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Regulatory Framework\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The gap between crypto vs digital currency may best be exemplified by how each is regulated.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The meteoric rise of cryptocurrency may have caught governments sleeping.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many dismissed cryptocurrency as a passing fad or even a fool\u2019s errand. Governments seemed to ignore it, and many didn&#8217;t feel the need to begin the discussion on crypto legislation.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As cryptos gained popularity and value, countries scrambled to enact regulations and legislation. Many have found it difficult to oversee and control something that was built to not be controlled.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Much of the crypto world is still the wild, wild west. It can sometimes be prone to fraud, wild price fluctuations, and market manipulation.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Digital currency instruments are the polar opposite.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Traditional financial accounts\u2014like those using digital currency\u2014are highly regulated by a series of rules and regulations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are checks and balances with most every form of financial instrument.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Institutions are required to keep accurate accounting of every transaction.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">They must provide records and reporting to auditors and oversight agencies.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Government regulation helps keep financial markets safe and stable.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Use Cases of Cryptocurrency\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Cryptocurrency can be a great way for those who are away to send money back home.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sending crypto across borders eliminates the extra fees of an intermediary. Funds are verified and cleared through the blockchain process, and are available immediately.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The transaction is private\u2014no one knows that money was ever sent or received\u2014which makes the transaction much safer.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Shop owners around the world accept cryptocurrency as payment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Transacting in crypto reduces transaction fees and eliminates the need to convert one country\u2019s currency into another\u2019s.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Owners are assured that deals are final and cannot be fraudulently charged back.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Use Cases of Digital Currency\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Central bank digital currency(CBDC) is being tested or implemented by many governments.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">CBDC is a digital version of a country\u2019s fiat currency.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Issued by the central bank, this form of digital currency is backed by the full faith and credit of the government\u2014just like paper money.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Governments plan on using digital currency to compliment the current system.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">CBDC address the following needs:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Financial inclusion for unbanked and underbanked populations<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lowering transaction costs\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Offering cheaper and easier access to money<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Provide a way for fiscal and monetary policy to be implemented\u00a0<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">The Future of Both Cryptocurrency and Digital Currency\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The future seems bright for both cryptocurrency and digital currency.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Digital currency continues to expand and offer new forms such as virtual currency.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Virtual currency is issued by developers of a virtual platform, and is used as a form of electronic payment or store of value.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Virtual currency is accepted and used by members of a specific virtual community, and typically has no value outside that community.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Frequent flier miles are an example of virtual currency.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many developers are choosing to use virtual currency vs cryptocurrency for in-game purchases.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Central banks of governments around the world are exploring the viability of central bank digital currency. Some nations, including several in the Caribbean, have already implemented CBDC systems.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Crypto is etched into the fabric of modern society.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are crypto ATMs, and more businesses are accepting various cryptocurrency as payment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cryptocurrency exchanges\u2014similar to stock exchanges\u2014have popped up. Speculators can buy and sell 24 hours a day, seven days a week.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whether it\u2019s the ease and privacy of payment, or the speculative thrill of big potential gains, crypto has the world\u2019s attention.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some investors choose to keep their savings in paper and digital form, but <strong><a href=\"https:\/\/www.advantagegold.com\/2023\/05\/19\/what-is-a-gold-ira-rollover\/\">roll over<\/a><\/strong> or transfer their retirement plans into tangible assets such as gold and silver.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The precious metals IRA, the Gold IRA, and the Silver IRA are self-directed individual retirement accounts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong><a href=\"https:\/\/www.advantagegold.com\/gold-ira-investment\/\">Self-directed plans allow you to own physical assets<\/a><\/strong>\u2014gold and silver that you can hold in your hand\u2014to complement your digital currency.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For nearly a decade, Advantage Gold has been helping clients build a strong financial foundation rooted in physical assets while the rest of the world goes digital.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Call us today or <strong><a href=\"https:\/\/www.advantagegold.com\/contact\/\">click the link<\/a><\/strong> and tell us how to contact you.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We&#8217;re happy to help.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cryptocurrency and digital currency. Their names sound similar.\u00a0 They\u2019re both money that exists in cyberspace.\u00a0 It\u2019s logical to think there must not be any difference when comparing digital currency vs cryptocurrency. But that\u2019s far from the truth. While digital currency and cryptocurrency share some traits, they are vastly different and serve different purposes. We\u2019ll look [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":30338,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[536],"tags":[1291,1292,1293,1294],"class_list":["post-29605","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-education","tag-crypto-vs-digital-currency","tag-cryptocurrency-vs-digital-currency","tag-difference-between-digital-currency-and-cryptocurrency","tag-virtual-currency-vs-cryptocurrency"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/posts\/29605"}],"collection":[{"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/comments?post=29605"}],"version-history":[{"count":0,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/posts\/29605\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/media\/30338"}],"wp:attachment":[{"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/media?parent=29605"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/categories?post=29605"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.advantagegold.com\/wp-json\/wp\/v2\/tags?post=29605"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}