Difference Between Cyber Currency and Cryptocurrency

Introduction 

The rise of cryptocurrency can be attributed to the increasing popularity of blockchain technology. Blockchain is the underlying technology that powers cryptocurrency, and it is seen as a highly secure and transparent way of conducting transactions. With more and more businesses and organizations beginning to explore the use of blockchain, the demand for cryptocurrency is likely to continue to grow. 

Cryptocurrency is a digital or virtual currency that uses cryptography for security. Cryptocurrencies are decentralized, which means they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services. 

Any currency maintained in digital form is referred to as digital currency. While the phrase is often used to refer to cash that has no physical form and solely exists online, this is not the recommended usage. We’ll help you understand the difference between the two in this article. 

Digital Currency Vs. Cryptocurrency – What’s The Difference? 

Before beginning with the difference between cyber currency and cryptocurrency, let’s understand what they’re. 

What is Digital Currency? 

While regular currency exists physically in the form of paper bills and coins, digital currency exists only in digital form. 

There are several benefits of using digital currency. One of the most significant advantages is that digital currency can be sent and received anywhere in the world almost instantly and at a very low cost.  

Another benefit of digital currency is increased security. When you make a transaction with digital currency, the transaction is verified and recorded on a public ledger. This means that it is very difficult to alter or create transactions fraudulently. In contrast, traditional bank transactions are often processed through centralized systems that are vulnerable to hacking and fraud. 

Despite these advantages, there are also some risks associated with digital currency. One of the biggest risks is theft. Because digital currency is stored electronically, it can be stolen by hackers if the proper security measures are not in place.  

Another risk is that digital currency can be subject to inflationary pressures. Because there is a limited supply of digital currency, an increase in demand can lead to a rapid increase in price. This can make digital currency impractical for use as a day-to-day currency. 

What is Cryptocurrency? 

Satoshi Nakamoto: Cryptocurrency is a type of money only available in digital form. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are created through a process called mining, which involves using powerful computers to solve complex math problems. Once a cryptocurrency is mined, it can be bought, sold, or traded on digital currency exchanges. 

It is widely defined as a type of currency that exists only in digital form. Bitcoin is the best-known example of a cryptocurrency. Like traditional currency, cryptocurrency can be used to buy, sell, and trade goods and services. However, cryptocurrency differs from the traditional currency in a few key ways: 

• Governments or financial institutions do not regulate cryptocurrency.
• Cryptocurrency is often anonymous, meaning that users can transact without revealing their identity.
• Cryptocurrency is often volatile, meaning that its value can fluctuate dramatically.
• Bitcoin Cash, Litecoin, Ethereum Classic, Bitcoin SV, Monero, Dash, Zcash, Tezos, and Chainlink are some examples of alternative cryptocurrencies ,i.e., other than Bitcoin.

Difference between Digital Currency and Cryptocurrency 

1. Centralization: 

The main difference between digital currency and cryptocurrency is who has control over the value of the coins. With digital currency, it would be the central bank and government that would have control over the value of the currency. However, with cryptocurrency, the value is determined by the market and is not controlled by any central authority. This is why cryptocurrency is often seen as more volatile than digital currency. 

For example, in 2021, the Turkish Lira depreciated by over 40%. This is because the central bank was not in control of the currency. In contrast, cryptocurrencies are not affected by such problems as any central authority does not control them. 

2. Encryption:  

The digital currency uses symmetric encryption to protect data. This means that the same key is used to encrypt and decrypt data. The key is typically a piece of information that is known only to the sender and receiver of the data. For example, when you send digital currency to someone, the transaction is encrypted with a symmetric key. The recipient of the digital currency can then use the key to decrypt the transaction and access the funds. 

Cryptocurrency uses asymmetric encryption to protect data. This means that two different keys are used to encrypt and decrypt data. One key is typically public, while the other key is private. The public key can be used by anyone to encrypt data. Only the owner of the private key can decrypt data that has been encrypted with the public key. For example, when you send cryptocurrency to someone, the transaction is encrypted with the recipient’s public key. The recipient can then use their private key to decrypt the transaction and access the funds. 

3. Transparency:  

Transparency is an important characteristic of digital currencies. When users can see the transactions that have taken place on the blockchain ledger, they can have confidence in the system. This confidence is important because it helps to build trust between users and the system.

4. Anonymity:

Cryptocurrencies are transparent yet anonymous. Anonymous in the sense that users can transact without revealing their identities. The anonymity of cryptocurrencies can be a double-edged sword. On the one hand, it can provide a level of privacy that is not possible with traditional currencies. On the other hand, it can also be used for illegal activities, such as money laundering and tax evasion. 

5. Stability:  

Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to the whims of central banks or other financial authorities. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. 

Cryptocurrencies are often more volatile than digital currencies. This means that their value can fluctuate dramatically. For example, the value of Bitcoin has been known to drop by as much as 30% in a single day. In contrast, digital currencies are typically more stable. This makes them more practical for use as a day-to-day currency. 

6. Legality:  

Digital currencies are legal in a number of countries, including the United States, Canada, and the European Union. In these countries, digital currencies are considered legal tender and can be used to buy, sell, and trade goods and services. On the other hand, cryptocurrency is subject to different regulations in different countries. In some countries, cryptocurrency is considered a commodity, while in others, it is considered a security. 

Advantages of Digital Currencies 

1. Sending and Receiving Digital Currencies:  

Digital currencies can be sent and received anywhere in the world almost instantly. This is because digital currencies are not subject to the same restrictions as traditional fiat currencies. 

2. Low Transaction Costs:  

The transaction costs of digital currencies are very low. This is because there are no middlemen or third-party processors involved in the transaction. 

3. Security:  

Digital currencies are very secure and difficult to alter or create transactions fraudulently. This is because all transactions are verified and recorded on a public ledger. 

4. Alternative to Fiat Currencies:  

Digital currencies offer an alternative to traditional fiat currencies. This is because they are not subject to the same economic conditions as traditional fiat currencies. 

5. Buying, Selling, and Trading:  

Digital currencies are a type of asset that can be bought, sold, or traded on financial markets. This is because they are seen as a viable investment opportunity by many investors. 

Disadvantages of Digital Currencies 

1. Theft:  

Digital currencies are subject to theft by hackers. This is because they are stored electronically and can be accessed by anyone with a computer. 

2. Inflation:  

Digital currencies can be subject to inflationary pressures. This is because there is a limited supply of digital currency. 

3. Regulation:  

Governments regulate digital currencies. This is because they are seen as a threat to traditional fiat currencies. 

4. Centralization:  

Digital currencies are centralized. This is because they are not subject to the same decentralization as traditional fiat currencies. 

5. Acceptance:  

Digital currencies are not widely accepted. This is because they are seen as a risk by many businesses and organizations. 

Advantages of Cryptocurrencies 

• The volatility of cryptocurrencies makes them an attractive investment for those looking to make a quick profit. Though, it’s a double-edged sword.
• The lack of regulation means that cryptocurrencies are not subject to the same rules and restrictions as traditional currency. 
• The decentralized nature of cryptocurrencies means that they are not subject to the whims of central banks or other financial authorities. This makes them more stable and less likely to be impacted by political or economic turmoil.
• The use of blockchain technology makes cryptocurrencies more secure than traditional methods. This is because blockchain is a decentralized and distributed ledger that is very difficult to hack or tamper with.
• The anonymous nature of cryptocurrencies makes them more private than traditional methods. This means that users can transact without revealing their identities.

Disadvantages of Cryptocurrencies 

• The volatile nature of cryptocurrencies can make them a risky investment. The value of a cryptocurrency can fluctuate dramatically in a short period of time, making it difficult to predict what the value will be in the future.
• The lack of regulation means that there is no protection for investors. Cryptocurrencies are not subject to the same rules and regulations as traditional investments, meaning that there is no safeguard if the value of your investment plummets.
• The decentralized nature of cryptocurrencies means that there is no single authority responsible for their value. This can make it difficult to determine what the value of a cryptocurrency will be in the future.
• The use of blockchain technology makes cryptocurrencies more secure than traditional methods but also more difficult to understand. Blockchain is a complex and technical system that can be difficult to wrap your head around.
• The anonymous nature of cryptocurrencies can make them attractive to criminals and those looking to avoid government scrutiny. Transactions made with cryptocurrencies are not subject to the same level of scrutiny as traditional financial transactions.

Conclusion 

The use of cryptocurrency has been on the rise in recent years, with more and more people using it as a way to store and trade value. There are a number of reasons for this, including the fact that a cryptocurrency is a decentralized form of currency, which means it is not subject to government or financial institution control. Additionally, cryptocurrency is often seen as a more secure form of investment, as it is not subject to the same volatility as traditional markets. You can visit UNext’s blogs on blockchains to learn more about cryptocurrencies.