You can receive, transfer and/or exchange digital currency for another currency. But, it acts in the same way as physical, traditional – or fiat – money. In a nutshell, digital currencies are another name for money used to pay for specific goods or services on the Internet.Īs you can probably imagine, digital money is entirely digital, it doesn’t have a physical equivalent in the real world. Usually not issued by a governmental body, virtual currencies are not considered a legal tender and they enable ownership transfer across governmental borders.Īccording to the European Central Bank’s 2015 “Virtual currency schemes – a further analysis” report, virtual currency is a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money. Not having a physical form, they allow for nearly instantaneous transactions. Examples of digital currencies include cryptocurrencies, virtual currencies, central bank digital currencies and e-Cash.ĭigital currencies exhibit properties similar to other currencies, but do not have a physical form of banknotes and coins. Let’s pit digital currencies vs cryptocurrencies and see who comes out on top… Digital Currency DefinedĪccording to Wikipedia a Digital currency (digital money, electronic money or electronic currency) is a balance or a record stored in a distributed database on the Internet, in an electronic computer database, within digital files or within a stored-value card. Have you ever wondered what the differences between digital currency and cryptocurrencies are? “Hold on a second”, you say… “Digital currencies and cryptocurrencies aren’t the same thing?”.

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