Posted by Xoken.org – Financial transactions entering the digital era have transformed significantly with the emergence of digital money in the form of bank balances to leading e-wallets or digital wallets that we often use every day. However, the emergence of Bitcoin has added a new dimension to the world of finance by offering a decentralized alternative that differentiates it from conventional digital currencies. Quoting from Pintu Academy, here are the differences between digital money and Bitcoin.
Digital money, which is a digital representation of fiat currency, has become a mainstay in online transactions which allows users to transact quickly and easily within the country and can now even be used in neighboring countries such as Malaysia, Thailand, Singapore and others.
However, this system comes with certain limitations such as transaction fees which can be expensive, transaction limits determined by the service provider, and transaction completion times which can take up to several working days.
Trust in third parties is also at the heart of centralized digital money systems, with user funds managed and controlled by service providers thereby demonstrating reliance on a central authority in managing transactions.
In contrast to digital money, Bitcoin offers a decentralized model using blockchain technology. Bitcoin not only allows unlimited transactions, but also gives users the freedom to send or receive money without the need for a third party.
Bitcoin transactions can be completed within 10 to 60 minutes, providing significant efficiency compared to traditional payment systems.
One of the main advantages of Bitcoin is its fee structure. Bitcoin transaction fees are determined by the user and depend on network conditions. This provides greater flexibility compared to the fixed fees charged by digital money providers.
Decentralization vs centralization
The essence of the difference between Bitcoin and digital money lies in the concepts of decentralization and centralization.
Bitcoin operates an open network in which anyone can participate without needing authorization from a third party, making it resistant to censorship and manipulation.
In contrast, centralized digital money requires trust in the institutions that manage and control access to funds. Both systems have their roles in the digital financial ecosystem, with Bitcoin offering an attractive alternative for those seeking greater transparency and control over their finances.