What are digital currencies?
Digital currencies are loans used on the Internet. Digital cash only exists in digital form. It has no physical equivalent in real life. However, it has all the attributes of traditional money. Just like conventional money, you can get it, transfer it or exchange it with another currency. You can use it to spend products and services, such as mobile and Internet interaction, online stores and others. Digital currencies, on the other hand, have no physical or political boundaries. Transactions can be sent from anywhere and obtained anywhere in the world. Digital accounts and portfolios can be considered as bank deposits.
What are cryptocurrencies?
Cryptocurrencies are a range of digital currencies. Cryptocurrency is a resource used as an exchange method. Cryptocurrencies use Blockchain and a decentralized ledger.
What are the differences between digital and cryptocurrencies?
Although cryptocurrency is a kind of digital currency, there are some fundamental distinctions.
Difference # 1 – Structure
Digital currencies are centrally controlled. This means that there is a group of individuals and IT systems that monitor the status of transactions in the network. Cryptocurrencies are decentralized and most of the community defines guidelines.
Difference # 2 – Privacy
Digital currencies require user recognition. You would expect to upload your own photo and some files provided by public authorities. Purchases, investments and any other process with cryptocurrencies do not require you to need them. However, cryptocurrencies are not completely anonymous. The addresses do not include any personal information such as name, private address and so on, every transaction is registered, senders and receivers are publicly known. Therefore, all transactions are tracked.
Difference # 3 – Open
Digital currencies are not transparent. You can not choose the address of the wallet and see all the money transfers. This information is private. Cryptocurrencies are transparent. Everyone can watch any transaction of any user, since all income streams are placed in a free chain.
Difference n. 4 – Control of transactions
Digital currencies have a central authority that handles problems. It may cancel or interrupt transactions at the request of the participant or authorities or suspect of fraud or money laundering. The district controls cryptocurrencies. It is extremely unlikely that users will accept updates in Blockchain. However, the amount of money was significant and the choice doubted.
What are the advantages and disadvantages of digital currencies?
In a central system, there is a group of individuals responsible for the state of the whole system. If you have made a mistake in a transaction, you can make a request to the company and depend on the practical result. It is not possible to do this in the decentralized cryptocurrency system works inside. On the flip side, centrally controlled networks keep a lot of secret data about their users. This data may be lost, stolen or given to the police at the request of the court. Decentralized networks do not have these problems. The same applies to the cancellation of a transaction. If the system is revocable, you can make changes to an exchange. At the same time, it opens up space for fraudulent activity.