Even though they sound alike and function in a similar manner, digital, virtual, and cryptocurrencies are in fact different. Listed below are the main points of difference between the three types of currencies:
- All virtual currencies and cryptocurrencies are digital currencies. Not all digital currencies, however, belong to those two categories. For example, CBDCs are not virtual currencies or cryptocurrencies.
- Digital currencies can be regulated or unregulated. One example of a regulated digital currency is CBDC. Examples of unregulated digital currencies are Bitcoin and Ethereum. The overwhelming majority of virtual currencies are unregulated, while cryptocurrencies are not regulated in any jurisdiction.
- Not all digital currencies are cryptographically secured. Cryptocurrencies always use cryptography to secure their networks, while virtual currencies may or may not use cryptography to secure their networks.