Digital currency vs cryptocurrency: What the row is all about – Times of India

Digital currency vs cryptocurrency: What the row is all about – Times of India

NEW DELHI: With reports of the government seeking to prohibit private cryptocurrencies in the country through a Bill in the upcoming winter session of Parliament and create a framework for an official digital currency to be issued by the Reserve Bank of India (RBI), it is imperative to understand the difference between the two. While all cryptocurrencies can be termed as digital currencies, the reverse is not true. We explain why.
Main difference: Cryptocurrencies are managed by a computer algorithm, while digital currencies are backed by an authority
Now, digital currencies exhibit properties similar to other currencies, but do not have a physical form like that of banknotes and coins. You can receive, transfer and/or exchange digital currency for another currency. It can be used to pay for goods and services, in an online store, for example.
When it comes to digital currency, the issuing authority is of prime importance. For example, it usually refers to the electronic form of fiat money issued by governments. In India, like regular fiat currency, it will be the Reserve Bank of India that will issue digital currency. RBI said in July it was working towards its own digital currency and the Central Bank Digital Currency (CBDC).
“A CBDC is the legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. CBDC is a digital or virtual currency but
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