Educational Byte: Electronic Money vs. Cryptocurrency
Everything is digital these days, and that, of course, includes our money. It’s less and less typical worldwide to pay with physical cash or coins, instead preferring some kind of virtual transaction. It’s just more practical, even safer if we think about physical assaults. On the other hand, not all electronic money works the same or offers the same features.
We need to have this in mind for the sake of our financial privacy and autonomy: electronic money isn’t the same as cryptocurrencies. Instead, we can say that cryptos are barely a type of electronic money, which is more of a category than a single thing. Electronic money or e-money refers to digital forms of currency used for online transactions and stored in electronic devices or systems, such as bank accounts, computers, or digital wallets. The category encompasses various forms, including cryptocurrencies, transfers with digital fiat (national) currencies, Central Bank Digital Currencies (CBDCs), and e-money services, each with different underlying technologies, issuers, regulations, and use cases.
An important factor to distinguish among these types is the centralization (or not) of these systems. This way, the e-money can be centralized, like fiat currencies and CBDCs, where a central authority (e.g., a government or bank) controls issuance and regulation; or decentralized, like cryptocurrencies, where a distributed network manages transactions and governance without central oversight.