What is the difference between digital and coded currencies? .. 4 fundamental differences

The world is strongly heading towards the use of cryptocurrencies in daily trading after it has become a strong market that competes with its paper counterpart.

Questions are frequent about the identity of the difference between cryptocurrencies and digital currencies..Are they symmetry or are there any aspects of disagreement?

Clearly, there are important points that bring together the two currencies, the most important of which are the use of blockchain technology, which requires access to these currencies via computers and mobile phones only, because they are only present in an electronic form.

On the other hand, there are fundamental differences between these two currencies, related to the method of issuance, circulation, risks and use of use.

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Current currencies are one of the aspects of the digital currencies that have appeared in the financial markets nearly 10 years, and have emerged during the past three years strongly, and one of its most prominent models is Bitcoin, Etharim, Penns Quinn, Cardano, and Douj Quin.

These currencies are not organized by an official authority, as they are not issued by central banks like other currencies.

Rather, it is obtained through what is known as the mining mechanism that depends on solving complicated accounting equations by advanced computers and is also used to manage the construction and control of new currency units..

This process includes verifying data health and adding transactions to the general record using blockchain.

On the other hand, digital currencies are issued by central banks and are subject to regulating states according to their monetary policy and consistency with financial policies, and the Central Bank of the Central Bank (CBDC) is called CBDC).

Within the framework of the central organization, the digital currency has an electronic record to represent the default shape of the country's paper currency, and it is similar to the paper currencies that carry a distinctive serial number, to prevent forgery or provide the possibility of tracking it.

Limited

Alberto Montes Kabanis, a professor in the Department of Applied Economics and Statistics at the National University of Distance Education (UNED), is one of the most prominent differences is the quantity that can be issued.

Kabannis indicates in a note published by the Spanish Bank "BBVA" that digital currencies can be issued by central banks without borders according to the economic performance data of each country.

"While the cryptocurrency currencies are previously determined, for example, bitcoin version will not exceed 21 million units," he added..

The total value of encrypted currencies in the world is approaching 5,300 currencies from about a trillion dollars.

Risks

The trades of cryptocurrencies show that they are severe fluctuation between height and a large scale within a short period of time, due to their dependence on the price determined by supply and demand only and not supported by official government agencies, which reflects the level of high risk, according to what Natalia Espanyol, the economic expert inBbva.

Espanyol notes that digital currencies will not be subject to the same thing as their price is related to the economic and political performance of countries, and is subject to what is known as legal giving, that is, it is the recognized method for settling public or private debt or fulfilling a financial commitment in contrast.

Legitimacy of activities

Current currencies face several criticisms that are easily associated with illegal activities such as narcotic drug trade, money laundering and penetration of international sanctions, along with poor infrastructure.

And because it is not issued by any central authority that some consider immune to the government's intervention or manipulation, and others deal with it as a hedging tool against inflation..

Whereas, the digital currencies that are subject to a distinctive sequence and central control can be tracked and monitored by illegal transactions.

In general, the Bank of International Settlements (BIS) has set a package of properties for the Central Banking Currencies, including that the transfer amount is the value obtained upon receipt, acceptance and availability of all types of transactions via the Internet and not connected to the Internet around the clock throughout the week..

And that its cost is low and zero in the moments of construction and the final distribution of money, with a safe and flexible system at all times against potential electronic attacks, system failure or disturbances.

Among the characteristics of digital currencies is to be operating between different banking systems, with being strong and legal thanks to the central bank's support.

Central currency train starts

Several central banks have started to prepare the markets to receive official encoded currencies centrally, in order not to leave the square of encrypted currencies issued by private companies and institutions.

Cambodia is the small country in Southeast Asia is the first to lead the world to launch the digital giant, under the name "Baconge".

During last April, China announced the launch of a digital -backed digital currency, with an ambitious plan to expand the use of the digital yuan and reduce the amount of material currency available in the market..

The Chinese Central Bank (the Central Bank) said, early this month that it tests the possibility of using the digital yuan for border payments, and the digital yuan has been tried since last year in several cities in China.

There are major economies such as India and Pakistan preparing to explore a similar step, and the Central Bank of Japan has started experiments to study the feasibility of issuing its own digital currency.

While the British authorities announced the possibility of issuing a new digital currency, the British Treasury Secretary, Rishi Sonak, said that they may be called "Brittenn".

The Bank of England confirmed that if the new currency is passed, it will be a new form of digital money for families and companies to be used along with cash and banking deposits, instead of replacing it.

On the European Union level, German Finance Minister Olaf Schultz called for the launch of a joint European digital currency, and that Germany will support the construction of the work carried out by the European Central Bank with the aim of establishing a digital euros currency..

He stressed that Europe needs innovative and competitive solutions for payment operations.

In mid -February, the US Federal Reserve, Jerome Powell, said that the federal is studying a digital dollar, stressing that this project is one of the priorities for the federal, but at the same time he does not want the wheel in the project but will be careful.

The US Treasury Secretary, Janet Yellen, had previously said that digital currencies may lead to faster and cheapest payments, but there are many issues that must be studied, including consumer protection and money laundering.