Before exhaustively dwelling on the disparities between these two terms, it is necessary to make a concise appraisal of what these terms are. It is trite to say that currencies which are referred to as digital in nature due to its structural form can be defined as one that does not possess an equal in reality, that is, the physical. Nevertheless, possesses all the qualities of the conventional denotation of money. This is expressed by its possible means of use where it can be gotten, passed or substituted and spent on a wide range of necessities and wants physically and online without restrictions of any form and splendid international coverage. Also, accounts which are digital in nature, as well as wallets of such nature, are equivalent to deposits made in the bank.
However, cryptocurrencies, on the other hand, refers to a defined class of currency existing in digital form, considered as an important possession for trade which makes use of a block chain as well as a ledger with a decentralized structure. Nevertheless, it is instrumental to consider the disparities between the digital currencies and cryptocurrencies despite the similarity that exists between these two terms. There exist some apparent disparities which require erudite examination.
First, digital currencies and cryptocurrencies are different in structural terms where currencies of digital nature are managed in a central manner. This central management operates through the expertise of a coordinated group of persons as well as ICT devices which manage all transactions which require execution.
Moreover, digital currencies and cryptocurrencies are expressly at the disparity in terms of Privacy. Digital currencies usually require personal identification. Any user will be required to upload certain files and a picture as stipulated by the verified authority. However, all these are not needed to purchase, invest or execute other transactions whereas cryptocurrencies do not enjoy complete anonymity and address does not require information which is personal to the user like names among others and both the person who sends and the person who receives are known to the public. Hence, transactions are usually monitored.
Furthermore, digital currencies are expressly different from cryptocurrencies in the form of Openness. Currencies of digital form lack transparency as wallet address can’t be chosen and all transfers of cash cannot be seen as it is private information whereas cryptocurrencies enjoy all form of transparency and everyone can access all transactions as far as all streams of income are freely positioned in a chain form.
In Addition, digital currencies are different from cryptocurrencies in terms of control of transactions. Currencies of digital nature possess an authority that is central in nature which solves problems as it can end transactions where required such as participant’s request, authority’s request and in the event of scams as well as the laundering of money whereas cryptocurrencies are managed by the neighbourhood and blockchain updates are rarely taken by users.
Without undue prejudice, it becomes of utmost importance to make an appraisal of the benefits and detrimental effects of digital currencies and cryptocurrencies. The major advantage which digital currencies have is its centralized system which allows for demand to be made to the company when a mistake is made in the course of a transaction whereas cryptocurrencies, on the other hand, operate a decentralized structure which makes it difficult to make this demands.
However, despite this beneficial advantage which digital currencies offer, it still has its default as it encourages that secret database to be kept on users which could be misplaced, obtained under a false pretence or lawfully whereas cryptocurrencies do not encourage this due to its centralized structure. Also, the benefit of modification of transactions can encourage fraud despite its great benefits.