<p>Two more differences 
(1) You can pay your taxes in a government controlled digital currency, and you can't do that in cryptocurrency.  According to Modern Monetary Theory, that is an essential element to the fundamental value of a currency
(2)  even though an individual cryptocurrency may have the feature of a limited supply, there's nothing to stop multiple cryptocurrencies being created, potentially diluting each other's value.  That is not the case with the single currency of the realm.  </p>

CC BY-SA 3.0
2017-10-08T11:40:51.383Z
2017-10-08T11:40:51.383Z
dm63
<p>The major difference in cryptocurrencies is the absence of the centralised control on money supply. In fact, money growth rate and the maximum amount possible of money supply in cryptocurrency is typically defined at the creation of the currency, and is publicly known.</p>

<p>You can read <a href="https://www.economist.com/news/briefing/21677228-technology-behind-bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable" rel="nofollow noreferrer">this economist article</a>, makes a great summary of blockchain and potential impact of the technology and cryptocurrencies in society. The <a href="https://en.wikipedia.org/wiki/Cryptocurrency#Overview" rel="nofollow noreferrer">wikipedia article on cryptocurrencies</a> also collects several interesting sources.</p>

CC BY-SA 3.0
2017-10-06T19:50:44.340Z
2017-10-06T19:50:44.340Z
JoaoBotelho
<p>Digital currencies and cryptocurrencies differ from each other in how they operate.</p>

<p><strong>Digital currencies:</strong> </p>

<p>_There must be a server for the whole system to be maintained. That means authorities can control the currencies by controlling the server. </p>

<p>_From the security perspective, The server needs to be protected from hackers.</p>

<p><strong>Cryptocurrencies:</strong></p>

<p>_Everything operates on the blockchain, which can be considered the same as digital currencies 's server, but it doesn't run on 1 hard server . It runs on hundreds of thousands of computers that miners turn on for block reward. Each of these computer runs the same thing on it simultaneously, and when all of those computer (or a majority of them) reach a consensus, that's the blockchain. </p>

<p>_Because there's no server, governments can't control the blockchain or shut it down (with the same reason why copyrights holders can't shut bitTorrent down, or why people can't kill SkyNet in the Terminator series). In the case governments want to shut the blockchain down, with just 1 single of the hundreds thousands computers, located around to globe, running the blockchain, survives, the chain survives.</p>

<p>_From the security perspective, the only way to "hack" a block chain is to hack 51% of ALL THE COMPUTERS running it AT THE SAME TIME (within the same block, which typically ranges from a few seconds to a few minutes). That's why if the chains is large enough, it's theoretically impossible to hack the blockchain.</p>

<p>Edit: (further explaining the "hacking")</p>

<p>By hacking the blockchain, I mean the same as controlling a server that run something and change the datas. For example, the hacker can set the balance of his account to 1 million dollars. In online banking system, or digital currency server, it can be done by hijacking the server. As for cryptocurrencies, the same thing can be done by controlling 51% of all the hardware running the blockchain, and it have to be achieved within the same block on the chain (a few secs to mins), because when when the new block is mined or forged to the chain, all previous block is encrypted, which is impossible to decrypt within a a few seconds (block-time for the following block).</p>

CC BY-SA 3.0
2017-10-07T10:57:56.750Z
If downvoting, please provide a comment on the reason, so that it can be improved.
JoaoBotelho
CC BY-SA 3.0
2017-10-07T11:15:23.770Z
the point on how to hack is very interesting! Can you share your source? By hack do you mean creating fake currency, or shutdown the network?
JoaoBotelho
CC BY-SA 3.0
2017-10-07T11:23:04.710Z
@JoaoBotelho, I wasn't the one who downvoted. By hacking the blockchain, I mean the same as controlling a server that run something and change the datas. For example, the hacker can set the balance of his account to 1 million dollars. In online banking system, or digital currency server, it can be done by hijacking the server. As for cryptocurrencies, the same thing can be done by controlling 51% of all the hardware running the blockchain, and it have to be achieved within the same block on the chain (a few secs to mins). Thanks for pointing out, I think I should include this in the answer.
Nhu Thai Sanh Nguyen
CC BY-SA 3.0
2017-10-07T11:26:18.593Z
the comment wasnt for you :) your post was also downvoted, so I was saying this to the person who downvoted you
JoaoBotelho
CC BY-SA 3.0
2017-10-07T04:14:09.460Z
2017-10-07T11:26:14.830Z
2017-10-07T11:26:14.830Z
Nhu Thai Sanh Nguyen
<p>Given all the hype around the cryptocurrencies like bitcoin, ethereum, etc., I'm wondering what are the main differences between those and a possible digital currency, backed by a central bank, in a hypothetical 'cashless society'?</p>

<p>Any help would be appreciated.</p>

<cryptocurrency>
What are the differences between cryptocurrencies and digital currencies backed by CBs?
An old man in the sea.
# What are the differences between cryptocurrencies and digital currencies backed by CBs?

(Asked by: username_0 on 2017-10-05)

Given all the hype around the cryptocurrencies like bitcoin, ethereum, etc., I'm wondering what are the main differences between those and a possible digital currency, backed by a central bank, in a hypothetical 'cashless society'?

Any help would be appreciated.

**Tags:** cryptocurrency


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## 3 answers

### Answer by username_1 on 2017-10-08. Score: 2

Two more differences
(1) You can pay your taxes in a government controlled digital currency, and you can't do that in cryptocurrency. According to Modern Monetary Theory, that is an essential element to the fundamental value of a currency
(2) even though an individual cryptocurrency may have the feature of a limited supply, there's nothing to stop multiple cryptocurrencies being created, potentially diluting each other's value. That is not the case with the single currency of the realm.


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### Answer by username_2 on 2017-10-06. Score: 1

The major difference in cryptocurrencies is the absence of the centralised control on money supply. In fact, money growth rate and the maximum amount possible of money supply in cryptocurrency is typically defined at the creation of the currency, and is publicly known.

You can read [this economist article](https://www.economist.com/news/briefing/21677228-technology-behind-bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable), makes a great summary of blockchain and potential impact of the technology and cryptocurrencies in society. The [wikipedia article on cryptocurrencies](https://en.wikipedia.org/wiki/Cryptocurrency#Overview) also collects several interesting sources.


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### Answer by username_3 on 2017-10-07. Score: 0

Digital currencies and cryptocurrencies differ from each other in how they operate.

**Digital currencies:**

\_There must be a server for the whole system to be maintained. That means authorities can control the currencies by controlling the server.

\_From the security perspective, The server needs to be protected from hackers.

**Cryptocurrencies:**

\_Everything operates on the blockchain, which can be considered the same as digital currencies 's server, but it doesn't run on 1 hard server . It runs on hundreds of thousands of computers that miners turn on for block reward. Each of these computer runs the same thing on it simultaneously, and when all of those computer (or a majority of them) reach a consensus, that's the blockchain.

\_Because there's no server, governments can't control the blockchain or shut it down (with the same reason why copyrights holders can't shut bitTorrent down, or why people can't kill SkyNet in the Terminator series). In the case governments want to shut the blockchain down, with just 1 single of the hundreds thousands computers, located around to globe, running the blockchain, survives, the chain survives.

\_From the security perspective, the only way to "hack" a block chain is to hack 51% of ALL THE COMPUTERS running it AT THE SAME TIME (within the same block, which typically ranges from a few seconds to a few minutes). That's why if the chains is large enough, it's theoretically impossible to hack the blockchain.

Edit: (further explaining the "hacking")

By hacking the blockchain, I mean the same as controlling a server that run something and change the datas. For example, the hacker can set the balance of his account to 1 million dollars. In online banking system, or digital currency server, it can be done by hijacking the server. As for cryptocurrencies, the same thing can be done by controlling 51% of all the hardware running the blockchain, and it have to be achieved within the same block on the chain (a few secs to mins), because when when the new block is mined or forged to the chain, all previous block is encrypted, which is impossible to decrypt within a a few seconds (block-time for the following block).

> **Comments:**
> **username_2**: If downvoting, please provide a comment on the reason, so that it can be improved.  
> **username_2**: the point on how to hack is very interesting! Can you share your source? By hack do you mean creating fake currency, or shutdown the network?  
> **username_3**: @username_2, I wasn't the one who downvoted. By hacking the blockchain, I mean the same as controlling a server that run something and change the datas. For example, the hacker can set the balance of his account to 1 million dollars. In online banking system, or digital currency server, it can be done by hijacking the server. As for cryptocurrencies, the same thing can be done by controlling 51% of all the hardware running the blockchain, and it have to be achieved within the same block on the chain (a few secs to mins). Thanks for pointing out, I think I should include this in the answer.  
> **username_2**: the comment wasnt for you :) your post was also downvoted, so I was saying this to the person who downvoted you  

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