Difference between cryptocurrency and digital currency



Digital currency is essentially an electronic form of currency issued by the government while cryptocurrency is a repository of value, which is protected by encryption. Cryptocurrencies are called digital assets while digital currencies are not digital assets. The digital wallets that people started using, especially during the pandemic, may contain both digital currencies and cryptocurrencies, but these two can’t really be interchanged with each other.

Digital currency is the electronic form of existing paper money (notes). It can be used in contactless transactions, such as making payments electronically from your bank account to someone else. All online transactions involve digital currency. However, when you withdraw that money from a bank or ATM, it turns into a digital currency, liquid cash.

Digital currency does not require encryption but all users need to secure their digital wallets and banking apps with strong passwords and biometric authentication to reduce the possibility of hacking and theft. The same applies to debit and credit cards, which are transacted in digital currency.


Cryptocurrency is a repository of value, which is protected by encryption. Cryptocurrencies are privately owned and have been created using advanced blockchain technology. Cryptocurrencies have not yet been regularized in most countries. However, digital currency is regulated by the central bank.

Cryptocurrencies are protected by strong encryption and in order to trade in crypto, users must have a bank account, from which they buy cryptocurrencies of related value online way in exchange for digital currency (money in the bank account). Understand this as if you have Rs 150 in your bank account and you have purchased a piece of goods (which is currently worth Rs 150) in a capitalized manner of Rs 150.


When it comes to regulation, digital currencies will be supported by a central authority in India, which will be the RBI. THE RBI controls both liquid, cash, and digital currency transactions. In the case of cryptocurrencies, it is a decentralized system and is not regulated by a central authority. However, all crypto transactions are entered into a decentralized ledger which is available to all.

On the sustainability front, digital currencies are stable and easy to manage when it comes to transactions as they are widely accepted in the global market. On the other hand, crypto is very volatile and rates rise and fall almost regularly.

The details of the digital currency transaction are only available to the people involved, the sender and receiver and the bank. The details of crypto transactions are available to the public through the decentralized ledger.

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