With how much technology advances these days, the existence of electronic money is something that’s becoming more and more common in our everyday life. Thus, it’s not rare for people to assume that Bitcoin, and electronic money are one and the same. Shock of all shock, they’re not. But what exactly is the difference between Bitcoin and electronic money?
One of the fundamentals that differentiates Bitcoin and electronic money is that the latter is based upon a country’s fiat money. Bitcoin on the other hand, doesn’t. It’s an entity that’s independent just like any other currency.
But other than that, what else is the difference between Bitcoin and Electronic money? Well let’s check them out shall we.
5 Differences Between Bitcoin and Electronic Money
We’ve covered above that while both are used as a digital transaction method, they are fundamentally different from each other.
1. Bitcoin exists in a network known as Blockchain
This currency invented by Satoshi Nakamoto is one that is very unique. It’s a currency that’s made with the concept of peer-to-peer currency utilizing the technology known as Blockchain. User in this network have the same authorities against one another, so whatever happens inside the network is something that must be agreed upon by the users themselves.
Regular electronic money meanwhile is run on regular internet service. So, let’s say a blackout happens, Bitcoin will still be able to continue its transaction because of its peer-to-peer system.
2. Centralized and Decentralized System
Being in this Blockchain network, Bitcoin is a decentralized currency. What this means is that one user cannot change anything if there’s no agreement from the majority.
But electronic money is stored in a centralized system where transactions are monitored and logged by one entity like the Central Bank.
3. Cost and Time it Takes for Transactions
The next thing in the differences between Bitcoin and electronic money is that Bitcoin is way cheaper, easier and faster when it comes to sending or receiving Bitcoins. This is due to its peer-to-peer nature where no third-party exists between transactions.
But, the same can’t be said for electronic money. Let’s take Indonesia’s for example. The cost to transfer money from one bank to another is already very expensive, even more so if it’s a large sum of money. Not only that, but it can take some time until the money arrives to the other person’s bank account.
5. The Identity in Bitcoin and Electronic Money
It’s common knowledge that Bitcoin user is anonymous, with only public identity displayed. But all kinds of transaction, amount, time done and wallet address are all stored completely in the network.
This makes Bitcoin user able to account for their wallet, while still keeping the privacy of the user itself.
Electronic money in the meantime due to it belonging in a centralized system, it will be regulated by a single entity, be it through governmental one or private one. Making user’s personal identity becoming a requirement for using the service.
And that’s 5 differences between Bitcoin and electronic money that you need to know. Yes, they’re both digital currencies, but they work differently from one another, so let’s not mix them up ever again. See you!