With the trend of countries around the world towards issuing digital currencies such as the digital ruble, many may wonder about the difference between these currencies and cryptocurrencies. Here are 3 main differences:
– design:
Digital Currencies: These are traditional currencies such as the dollar, euro, and yen, and they are issued by central banks and managed and their value controlled by governments. Among the countries that are considering issuing their digital currencies are Russia and China.
Cryptocurrencies: Cryptocurrencies are developed using blockchain technology and are based on encryption, decentralized distribution and self-verification, and are not managed or valued by governments or central banks.
Since it is not issued by any central authority, it is considered by some to be immune from government interference or manipulation.
Cryptocurrencies face a number of criticisms, including their ease of use in illegal activities, as well as shortcomings in the underlying infrastructure. One of the most important cryptocurrencies is bitcoin.
– Currency trading security:
Digital currencies depend on the security protections available from banks, while cryptocurrencies are characterized by a high level of security and protection because they are based on decentralized blockchain technology, strong encryption and self-verification.
– Hedging:
Digital currencies can be used as a hedge against fluctuations in the traditional foreign exchange market, and cryptocurrencies can also be used as a hedge against fluctuations in the traditional currency, stock and commodity markets.
Source: agencies