The way people are attracted to cryptocurrency investment, government or central bank taking it as a competition for their physical currency. Because of that many countries are in a shakable position to tackle cryptocurrency. Due to this, they are thinking to launch a digital currency.
But the question arises of what is a digital currency, and how it will work. So first understand it. Digital currency is the electronic form of money that is generated by the Central Bank for contactless transfer to the people.
Because of this digital currency is totally handled in a centralized way. Whereas cryptocurrency is working in a decentralized way. Here no government or bank can’t control the transaction only the giver and lender work mutually for the transaction.
So questions arise about how it will benefit the people and how it differentiates from cryptocurrency.
Digital currency is used as the legal tender in countries whereas mostly cryptocurrency does not work as a mass benefit like digital currency.
Because of this many people don’t want to use cryptocurrency to buy or sell products. But you can use digital currency for this. But nowadays some countries like el Salvador legalize it. Some believe it can increase fundraising as FDI for the country.
We know that when a transaction is done by cryptocurrency, it will ensure no intermediate. Because of that if your system is hacked by any people they can get your money. After this, you can’t go for any law which helps you to get money back. But with digital currency transactions are remain in the safety region.
So digital currency transactions are checking all the data by the bank. But the way now people don’t want to share data or transactions the way banking system trust is decreasing among people, some people feel safe on cryptocurrency.
We know that cryptocurrency work on blockchain. But due to the decentralized network, it uses a public blockchain where anybody can hack on the transaction.
But in a digital currency, there is a private blockchain that presents in between banks. Because of so much safety, there is always under surveillance on transactions.
The main benefit of these digital currencies is that if any illegal activities happen, your transaction or money is in safe hands. So at this time, the digital currency race is going on but time will say what people want and select the payment method for transactions or daily life.
Private cryptocurrencies are not regulated by the government or central bank. The market stability of these currencies is always manipulated by the whale people. But digital currency is backed by Central Bank always be stable in any market situation. So, it makes the digital currency safer than private currency.