Electronic Currency VS. Cryptocurrency

Electronic Currency VS. Cryptocurrency
Electronic currency is non-tangible money that exists in your bank account and can be used for various payments. In essence, it’s an electronic alternative to cash. Cryptocurrency is a digital decentralized currency and offers more possibilities than electronic currency, including those that e-money has. You might wonder why you would need an additional way to buy something when you are already pretty much satisfied with paying with your card. Furthermore, you may confuse electronic currency with cryptocurrency since they’re both currencies. However, there are few major differences between these two methods that we will go through in this article.

The Idea Behind

Electronic currency

The idea behind creating electronic currency is to make it possible for people all over the world to buy products and services online, as well as the convenience of not carrying large amounts of cash.

The era of digitalization brought online purchases, which, of course, must involve some kind of payment. However, because this process is online and thus different from in-store purchasing, the payment process must also be different. That’s when the banking system came to the rescue and created something we call electronic currency, electronic money, or e-money.


When the global financial crisis started in 2008, which was mainly caused by poor bank management, individuals who were against the banking system and regulated money issued by central banks, came up with an idea to create a cryptocurrency.

Cryptocurrency is a digital currency that is based on crypto technology. In order to protect the information, crypto technology uses cryptography, which can’t be counterfeited, because only those who have a safety key can enter the system. Plus, every major cryptocurrency has a project behind it, about the importance of which, we will discuss in more detail below.


Electronic money doesn’t differ from physical (fiat) currency in the sense of its purpose or structure. If we want to buy something online using our electronic money, we have to have a valid debit or credit card issued by a bank. Whenever we use our cards’ information, our bank receives data about our buying process. This means that in this transaction there are three parties involved: us, the bank and the online store/place. Electronic money is governed by a centralized authority and is fully controlled by government bodies. On the other hand, cryptocurrency is not governed by a centralized authority, but rather a huge crypto-community. Thus its structure is decentralized.


Encryption is what makes a significant difference for each of us when it comes to the security of our digital wallets. Although the banking systems in the world are very secure, they can eventually get targeted by cyberattacks. Cryptocurrencies are blockchain-based currencies that rely on cryptographic methods, where data are securely stored and transferred, with no possibility of getting hacked.


One of the most important characteristics of cryptocurrency is transparency. Because of blockchain technology, two parties of a transaction are able to see not only the current transaction between them but also the history of their past common transactions. However, all other private information and conversations of users are carefully secured and available only to them. E-money transfers don’t provide you with much information. Apart from the date, time, bank, and amount of money, there’s no other data you can check.

Transaction Fee

Banks, as economic entities, are looking for profits by charging for their services. Whenever you make a transaction on the Internet using electronic money, you are also paying a fee to your bank. When you’re paying with cryptocurrency you’re paying directly to a seller and the transaction fees are lower.

Money Supply

When the money is issued by central banks it means that they decide how much money will be issued and when. If central banks don’t assess the current economic situation properly and decide to print money excessively, they can cause a rise in the inflation rate. This volatility in the money market is not welcome and usually causes big crises. With cryptocurrency, this scenario is not possible because there’s no single authority that can define the quantity of this currency in circulation. Cryptocurrency is controlled by a crypto community, which numbers over a hundred million users. 


Not only do cryptocurrencies serve as a way of transferring money, but many of the companies have their own cryptos. They have big projects behind them that facilitate business for legal entities and individuals or even take it to the next level. For example, the company Polkadot aims to enable a completely authority-free web, where only users will have control. This is possible by using blockchain technology, where transactions and information are made on the Polkadot relay chain. 
The nature of electronic money doesn’t enable you to work on any project that can have a significant impact on the community. 


Electronic money, just like fiat money, is legalized in every country, but this doesn’t apply to cryptocurrency. Cryptocurrencies are still in the process of legalization in many countries. Until now, Bitcoin is the most accepted one. Generally, the problem is that cryptocurrencies are relatively new in the financial market and many countries are still analyzing how to regulate them. For example, China used to be a home for cryptominers. However, recently they closed 90% of crypto mining industries due to the enormous energy power that is used for this action.


Electronic currency is a stored value for an electronic way of buying goods by using your bank cards on the internet, sale terminals, or between devices. It is controlled and monitored by central authorities, who have a direct impact on the money supply. When you make a transaction with e-money, you are paying a transaction fee, plus you don’t have full history data with the second party you are in the buying/selling process. Because it’s under the control of central banks all over the world, e-money is legalized. However, the system is not 100% secure and can be attacked by hackers.

Cryptocurrency is a decentralized complex peer-to-peer system that is based on blockchain technology. Cryptocurrency is used as a payment method between two parties only (client and a seller) and thus is easier to use and manage, plus it has a much lower transaction fee. For your better experience, when paying with cryptos, you are able to see every transaction you ever made.

To operate with cryptocurrency, you don’t need any bank’s approval. Because banks are excluded, they can’t control the money supply and cause the crisis and inflation rise. Another difference from electronic money is that cryptocurrencies are decentralized and can never be controlled by any government authority. However, because of that they’re still not accepted in all countries.

In addition to this, cryptocurrencies are not used only for payments, but there are great and interesting projects behind them.

Sources Consulted:
1. Difference Between Cryptocurrency and Digital Currency, Polygant, [cited 31 December 2019]. Available: https://polygant.net/blog/difference-between-cryptocurrency-and-digital-currency/
2. Digital currency v/s cryptocurrency: Brief overview for beginners, Analytics Insight, [cited 30 May 2020]. Available: https://www.analyticsinsight.net/digital-currency-v-s-cryptocurrency-brief-overview-for-beginners/ 
3. What is digital currency? Forbes, [cited 1 April 2021]. Available: https://www.forbes.com/advisor/investing/digital-currency 
4. What is e-money - definition, processes, challenges, Trimplement, [cited 29 April 2021]. Available: https://trimplement.com/blog/2020/10/emoney-definition/
5. Cryptocurrency, Investopedia, [cited 25 May 2021]. Available: https://www.investopedia.com/terms/c/cryptocurrency.asp 
6. Countries where Bitcoin is legal and illegal, Investopedia, [cited 12 June 2021]. Available: https://www.investopedia.com/articles/forex/041515/countries-where-bitcoin-legal-illegal.asp
7. Top 5 crypto projects to look out for, Medium, [cited 11 June 2021]. Available: https://medium.com/cryptalkers/top-5-crypto-projects-to-look-out-for-90e45550b7ad
8. The 10 most important cryptocurrencies other than Bitcoin, Investopedia, [cited 1 June 2021]. Available: https://www.investopedia.com/tech/most-important-cryptocurrencies-other-than-bitcoin
9. About Polkadot, Polkadot, [cited 2021]. Available: https://polkadot.network/about/ 

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