Digital Currency vs Virtual Currency: Key Differences and Risks

Digital currency is a broad term for electronic forms of money and payment systems. It can include central bank digital currencies, which are issued and backed by a country's central bank, as well as decentralised assets that use blockchain technology. Virtual currencies, such as Bitcoin, are digital representations of value that are not issued by a central bank or public authority. Some proposed private digital currencies have also been designed to be backed by financial assets or baskets of national currencies. Central banks in countries including Canada and Sweden have studied the benefits and risks of issuing digital versions of their national currencies. Key concerns include the effect on banking systems, regulation, privacy and the possibility of bank runs. Sweden has tested concepts for an e-krona, but no final decision to issue one has been made.

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