What is Digital Currency | Digital Currency and Cryptocurrency
Cryptocurrencies are digital currencies, but digital currencies issued by central banks are not cryptocurrencies. In recent years, with the high acceleration of digitalization and the innovation and innovation brought by cryptocurrencies dragging the classical finance world, the central banks of the countries have increased their attempts to issue digital money. In this article, you can find answers to questions such as what is digital money and how is it different from cryptocurrency.
What is Digital Currency?
The Central Bank Digital Currency (CBDC) is the digital version of countries’ own fiat currencies. Individuals can make expenditures and money transfers with digital money as in the traditional money system.
Credit card, debit card and electronic payment mobile applications, which have been used for many years, actually offer the use of digital money. The difference of the Central Bank Digital Currency from this digital use is that the digital money used through credit or debit cards is the money that private commercial banks take into their own accounts. In the most frightening example, if one of the banks used by an individual starts to fail to provide service quickly for various reasons and closes, there is a risk that the money will be lost in the accounts of the customers of that bank. Central Bank Digital Currency’
Digital money issued by central banks is the state of fiat money in the digital environment. digital currency; It is a system that enables users to use their fiat money in the digital environment.
Digital money is internet-based and stored electronically. Transactions and payments in the electronic environment can be made with digital money. digital currencies; It can be used for transactions such as shopping, paying bills, transferring money to someone else.
What is the Difference Between Digital Currency and Cryptocurrency?
Digital currencies have a centralized structure as they are digital currencies created by the central banks of the states. The production or supervision of digital currencies is carried out by a central authority. Many other cryptocurrencies have a decentralized system, especially Bitcoin, which was the first to be created and has the highest market value.
The decentralization of the blockchain means that it is not directly connected to a central element such as a government, company, individual or organization, and the decision-making and control mechanism is distributed over a network. In this way, no one has authority and control over the network and the transactions of the individuals using the network.