cryptocurrencies are a new paradigm for money. The reason for the emergence of cryptocurrency is to simplify the existing financial architecture so that transactions become faster and cheaper. The technology and architecture of these currencies decentralize monetary systems and enable the exchange of value and money directly for the parties without the need for intermediary institutions such as banks. In this article, I will answer the question, what is digital currency? I will talk about its types, use and purchase methods. If you are also looking to learn more about the world of cryptocurrency, I recommend that you continue with me.
What is cryptocurrency?
cryptocurrency is a type of virtual money whose security is provided through cryptography, and its most important feature is decentralization. Decentralization means that the cryptocurrency network is not controlled by any person, entity or organization. Any changes to the network are made by voting from the participants in the network, called nodes. The purpose of creating cryptocurrency is to reduce fraud, prevent forgery and any fraud, make exchanges easier and eliminate middlemen.
Examples of cryptocurrencies: Ripple, Ethereum, Tether, Bitcoin, etc.
The concept of digital currency
In general, any currency that is produced or used digitally is called digital currency. Therefore, digital currencies are not necessarily cryptocurrencies. The difference between digital currency and cryptocurrency is in their production type. Cryptocurrencies, as the name suggests, are generated by cryptography. For this reason, cryptocurrencies are part of digital currencies.
Digital currency or digital money is a type of electronic means of payment. Digital currency is similar in nature to money but not physical. That is, the user can make his payments using digital currency without the need to carry physical money. Digital currency is produced based on fiat currencies such as dollars and euros. In fact, users can do their transactions digitally with the help of digital money. For example, Visa card and PayPal are digital form of fiat currencies of dollar, euro and pound.
Terms equivalent to digital currency
Sometimes equivalents are used for the word digital currency. Users of this market usually consider reforms such as crypto, cryptocurrency, cryptocurrency and digital money to mean the same thing as digital currency. As mentioned, digital currency or digital money is a currency that exists in digital form unlike traditional physical currencies. But cryptocurrency is a currency that is produced based on cryptography and launched on the blockchain platform.
The first digital currency
)An unknown person named "Satoshi Nakamoto" introduced Bitcoin to the world in 2008 by publishing the "white paper" of this digital currency. Bitcoin became available to the public in 2009 and is still the most popular and valuable digital currency on the market. Maybe that's why many people who are less familiar with the field of crypto assume that "bitcoin" and "digital currency" both refer to the same concept and ignore the difference between digital currency and bitcoin! In fact, Bitcoin is only a subset of a large set of digital currencies.
Of course, we should not forget that before Bitcoin, there were many attempts to create a decentralized digital currency, but none of them could succeed and be accepted like Bitcoin.