CBDC, or Central Bank Digital Currencies: How Do They Differ from Crypto?

(Last Updated On: October 4, 2022)

Cryptocurrencies have been making headlines for years now, but there is another type of digital currency that is slowly gaining traction – CBDC, or central bank digital currencies. These are created by national central banks and have the potential to be used in day-to-day transactions. So, how do they differ from cryptocurrency?

What is a digital currency?

Digital currency is a type of currency that is available in digital form. It is similar to traditional currency, but it does not have a physical form such as coins or paper money. It is typically stored in a digital wallet and can be used to purchase goods and services online. The internet has provided individuals with the ability to conduct business across national borders, yet the system of currency can still be quite restrictive. Cryptocurrencies are a type of digital currency. They use cryptography to secure their transactions and to control the creation of new units.

How does digital currency work?

Digital currency is created through a process called mining. Mining is a process of verifying and adding transaction records to a public ledger called a blockchain. Miners are rewarded with digital currency for their work in verifying and adding transactions to the blockchain. When a transaction is made, it is broadcast to the network of computers running the digital currency software. Miners then race to verify and add the transaction to the blockchain. The first miner to verify and add the transaction is rewarded with digital currency.

How does digital currency work?

To understand how digital currency works, it’s necessary to examine the blockchain. The blockchain is essentially a decentralized ledger that manages every transaction on the network. This ledger is decentralized because it is shared and maintained across all computers on the network. In layman’s terms, a blockchain is a digital database that is distributed across a network of computers in order to ensure data integrity.

The data that is stored on a blockchain is immutable, meaning it cannot be altered. This is because each block of data is linked to the previous block and contains a cryptographic hash of that block. If any data in a block is changed, the hash of that block will also change. Since each subsequent block contains the hash of the previous block, it would be immediately apparent that something has been tampered with.

How many digital currencies are there?

There are three types of digital currencies: transactional, investment, and utility. Transactional digital currencies are those used to purchase goods and services. Investment digital currencies are those purchased with the intention of holding them for future price appreciation. Utility digital currencies are those used to access specific blockchain applications, like distributed cloud storage or social network.

How many digital currencies are there?

The two most widely used types of digital currencies are Bitcoin and Ethereum. Bitcoin is the original digital currency, first released in 2009. Ethereum was launched in 2015 as a programmable blockchain that supports smart contracts. There are currently over 18,000 digital currencies in existence.

What are Central Bank Digital Currencies?

A digital currency issued by a central bank. A central bank digital currency (CBDC) is a digital form of fiat money. CBDCs are issued by central banks and can be used to make electronic payments. They are designed to combine the best features of both fiat money and cryptocurrencies. CBDCs are seen as a potential way to reduce the cost of printing and circulating paper money. They could also make it easier for central banks to implement monetary policy.

CBDCs have been accepted by many countries around the world as a means of payment. Central banks in these countries have issued their own CBDCs, which are legal tender in their respective jurisdictions.

CBDCs can help the economy by providing a new way for people to transact. They can also help to reduce the cost of transactions and to increase the speed of transactions. The use of CBDCs can also help to reduce the cost of banking and to increase the efficiency of banking.

Existing Digital Currencies

Apart from popular cryptocurrencies like Bitcoin and Ethereum, hundreds of other digital currencies have been created. Altcoins like XRP, Cardano, Polkadot and Stellar, CBDCs like e-Naira and DCash, etc.


e-Naira is a digital currency created by the Central Bank of Nigeria that provides a unique form of money denominated in Naira. When opposed to cash payments, the e-Naira acts as both a means of exchange and a store of value, providing improved payment prospects in retail transactions. The e-Naira has a unique operational structure that sets it apart from other kinds of central bank money.

The e-naira is the electronic version of the Nigerian naira, the official currency of Nigeria. It was introduced in an effort to reduce the country’s dependence on cash and to promote financial inclusion. The e-naira can be used to make payments for goods and services online, as well as to transfer money between bank accounts. It is also accepted as a form of payment by some businesses in Nigeria.

Sand dollar

The Sand Dollar is a digital currency that was introduced by the Central Bank of The Bahamas in October 2020. The Sand Dollar is intended to replace the standard Bahamian Dollar. The Sand Dollar can be used for a variety of transactions and is issued by authorized financial institutions. All residents of The Bahamas can access the digital wallet through a mobile application or a physical payment card. It was introduced in an effort to create speed, efficiency, and security with payments.


DCash is a digital currency issued by the Eastern Caribbean Central Bank. It is used in the countries of The Bahamas, The Commonwealth of Dominica, The Dominican Republic, Grenada, Jamaica, Saint Lucia, Saint Vincent and the Grenadines, and the Turks and Caicos Islands. The Eastern Caribbean Central Bank (ECCB) is the monetary authority for the member countries of the Organization of Eastern Caribbean States (OECS). ECCB’s digital currency DCash is one of the most advanced and secure electronic payment systems in the region, operating on a proprietary platform designed by the ECCB.

Upcoming Digital Currencies

There are many digital currencies that are in development and have the potential to become widely used in the future. These currencies all have different features and benefits that make them appealing to users.

Digital Rupee

The digital rupee is a proposed digital currency to be issued by the Reserve Bank of India (RBI). It is intended to reduce the use of cash in the economy and to promote digital payments. The RBI has been studying the possibility of a digital rupee for several years but has not yet made a decision on whether to issue one.

E-krona digital currency

E-krona is a digital currency proposed by the Swedish government in order to replace cash. It can be used by anyone with a Swedish bank account and a smartphone. The Riksbank would issue the e-krona, which would be available to the public.

Digital Yuan

The digital yuan is a proposed digital currency by the Chinese government. It is also known as the e-yuan or renminbi. The digital yuan is intended to replace the physical yuan, and it will be pegged to the Chinese yuan.

Digital Ruble

The digital ruble is a proposed digital currency by the Russian government. It is intended to be used as a national currency and as a means of payment for goods and services. The digital ruble will be issued by the Russian Central Bank and will be backed by the reserves of the Russian Federation.

The launch of the digital ruble is part of the Russian government’s plan to reduce dependence on the US dollar and other foreign currencies. The digital ruble will be used alongside the existing Russian ruble and will be convertible into other currencies.

AUD stablecoin

AUD stablecoin is a digital asset that is pegged to the Australian dollar. The AUD stablecoin is backed by the full faith and credit of the Australian government. Australia and New Zealand Banking Group (ANZ) partnered up with crypto custodian Fireblocks to create an Australian dollar-pegged stablecoin called $ADC.

What is the difference between cryptocurrency and digital currency?

Cryptocurrencies, for the most part, are defined as a means of exchange that does not need any intermediaries. This is due to the fact that there is no authority (aside from the blockchain) holding control over the funds used in transactions or managing the system. On the other hand, bank digital currencies are decentralized, but they are not currencies at all.

Instead, they are designed to be a replacement for fiat currencies that are held in banks, hence their designation as “digital”. Unlike cryptocurrencies, bank digital currencies are not subject to volatility and are not used as a store of value. Instead, they are designed to be used as a means of payment and can be used to make purchases or pay for services just like fiat currencies.

How to exchange crypto at the best rates?

To get the best rates when exchanging crypto, it is important to shop around and compare rates from different exchanges. It is also important to consider the fees that each exchange charges. Some exchanges charge a flat fee for all transactions, while others charge a percentage of the transaction amount. It is also important to consider the reputation of the exchange. Some exchanges are known for being more reliable than others. If you want a reliable platform where you can exchange your crypto at the best rates, you should try Swapzone out. You can also review these supported exchangers and their offers here.

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