Posts in Category: Finances

Understanding The Difference Between Digital Currency And Virtual Currency

The way money is seen at present is quite different than what earlier existed. Today currency bills and cheques are not the only available way of carrying out transactions.

Until a few years ago, money was seen as something provided only by financial institutions like columbia bank colonia. It’s not the case anymore.

Digital and virtual currencies have gained immense popularity amongst the masses for the past few years. The reason for the demand is the ease of accessibility this mode of transaction offers to the user.

Though both types of currency are available in a virtual platform, there is some significant difference.

Digital currency

Digit currency can be called a superset that carries different virtual forms of currency, like cryptocurrency and virtual currency.

A digital currency can either be:

  • Regulated: When the country’s central bank issues a digital form of its currency notes, like a dollar.
  • Unregulated: When it is not under the control of the central financing institution, like virtual currency.

Virtual currency

A central bank of the country does not own a virtual currency. It is under the control of a private issuer or currency developer. These currencies are not under the regulation of the sovereign and are represented in the form of a token.

Virtual currencies are mostly based on a blockchain network, which relies on a system of trust. Their values are not stable; it fluctuates depending on the underlying activities, for instance, mining in the case of bitcoin.

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Conclusion

On comparing the descriptions of the two currencies, it can be concluded that all virtual currencies can be digital, but not all digital currencies are virtual.

Though both seem like a great option to invest money in, a lack of central regulation can greatly impact the valuation of the virtual currency.