Hey, what’s up crypto daily fans. I am Brian Wilson, and this is The Daily 2!
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So, at one point on the last episode, I noticed I mistakenly said digital currencies when I actually meant to say cryptocurrencies. And although cryptocurrencies are technically digital currencies… there are major differences that set them apart… and then it hit me, not everyone is aware of those differences.
On today’s episode, we will talk about digital currencies vs cryptocurrencies.
Digital currencies are just that, digital. 1’s and 0’s over the internet that don’t have a physical component in the real world. In that sense, the US Dollar, Japanese Yen, British Pound, Euro and every other FIAT currency is actually digital currency.
The money that you have in your bank account is mostly a digital currency. It might be surprising to learn this, but there is not enough physical cash to back up all the currency in the world. Not even close! In fact, economists have estimated that 92% of the world’s currency supply is digital. Only about 8% of all currency in the world is actually physical cash. And that estimate might be a bit low… as we continue to barrel towards a completely digital world.
Digital currencies are centralized. Meaning they have a central point of authority and can be and are manipulated heavily by central banks and governments.
Cryptocurrencies are decentralized. Meaning that they don’t have a central authority or centralized control and cannot be manipulated directly from a central bank or a government.
Just FYI, ripple is not cryptocurrency! Some argue that Bitcoin and Bitcoin Cash are the only 2 truly decentralized cryptocurrencies, as the creator of Bitcoin has never been revealed, but we’ll attack that on a later episode.
For a currency to be defined as a cryptocurrency, it has to use cryptography. Cryptography uses mathematics to ensure end to end encryption of a communication, or an exchange of information, to guarantee its security. Like having 2 pieces of the puzzle, or keys, that exactly fit each other to unlock the information contained within.
In the use of cryptocurrencies, this is the exchange in information of value, ownership and record keeping, but cryptography can be used, and is used, for all forms of information exchange when security is a primary objective.
Cryptocurrencies utilize blockchain technology. They are transparent, meaning anyone can see any transaction on the blockchain at any time, and they are permission-less, meaning anyone can use them without needing to get permission from anyone and without having to supply personally identifiable information.
Governments around the world are aiming to change this by implementing KYC (know your customer) and AML (anti money laundering) initiatives to exchanges, ATMs, 3rd party services, etc,
But the point is, if you want to buy and/or sell something with a cryptocurrency, you don’t have to ask permission.
You just might want to consider the legality of what you are doing, as look what happened to Ross Ulbricht from the silk road.
Well, I really try to get these videos down to 2 minutes and I really try to do one every single day, but I’m still learning all this video editing stuff. Having a blast doing it and I know I’ll keep improving but comment below about what you think about what I covered today, and/or what you suggest I can do or try to improve this channel, or to just say hello… because I’d love to get to know you a bit and have a discussion.
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