- Digital money is a broader concept than crypto
To begin with, digital money is a more general term. Cryptocurrencies are digital money, but digital money may not be exactly crypto in a particular case: it could be any national coin in the electronic form as well.
- Digital money doesn’t require encryption
One of the main differences lies in the very nature of these currencies: while digital money is not classified, cryptocurrencies are more specific and require encryption. Thus, even though both forms of assets are transactable online, they are presented in different forms.
- Digital money is centralized, while crypto is decentralized
Another distinction is that digital currencies are centralized, and all the transactions are regulated by special bodies. So, in order to make payment, you’ll need to get approval from a regulatory authority. Contrary, crypto is decentralized, all the transactions are approved by the community, and there is no regulatory authority over transactions.
- Different level of anonymity
Cryptocurrencies offer a bigger level of anonymity. While to perform a transaction with digital money, you’ll need to pass through verification process, and the transaction details will include information about the sender and the recipient, in the case of crypto, you’ll need only to specify your wallet address which doesn’t contain any personal information. However, you’ll be required to pass through the verification process to buy crypto in the first place, so cryptocurrencies don’t offer fully anonymous transactions.
- Crypto offers transparency of transactions
Even though personal information is hidden for transactions in crypto, it is possible to check all the transfers for a specific wallet if you know the wallet address, so crypto offers a full transparency by placing the revenue streams in a public chain. Contrary, digital currency transfers are confidential, and it is not possible to check on other users.
- Different regulatory bases
Regulations governing digital money utilization have been elaborated by most countries, for example, there is Directive 2009/110/EC establishing the legal framework for digital currencies within the European Union. However, crypto is still in its infancy stage, so its status hasn’t been finalized in the majority of countries.
- Crypto offers irrevocable transactions
Transactions made in crypto are irrevocable which is due to its decentralized nature: there is no third party involved in the process, so as soon as you make a payment, it is not possible to stop or cancel it. On the other hand, digital payment maybe be revocable. Thus, in case of a mistake, you’ll be able to contact the responsible authority and request a cancellation of the transaction if there are reasonable grounds.
Differences between cryptocurrencies and digital money