What is the Difference Between Traditional Money and Cryptocurrencies?

26 February of 2018

According to Mark Thompson, a senior financial analyst at Olsson Capital, many new investors still find it hard to differentiate between traditional money and cryptocurrencies. To help them better understand the crucial differences between the two forms of currency, he has compiled a list of some of the most important factors to look at when wanting to understand the difference between traditional money and cryptocurrencies such as Bitcoin, Litecoin and Ripple.


When you swipe your credit card at a facility, your information is attached to the transaction and your bank takes note of this. This information can be used at any time to track your payments and your whereabouts. When making use of cryptocurrency, money is sent online and carries no personal information with it. This gives you anonymity when transacting with cryptocurrency, making it a great investment for a crypto investor. 

Access to your money

If you bank with a traditional bank making use of traditional money, your account can be frozen for a number of reasons. This makes life a little more difficult as you don’t have access to your money when you need it. With cryptocurrency, the chance of your money being frozen is completely eliminated as there are no facilities that can freeze it, thus giving you access whenever you need it. For an investor, this is a huge benefit as you need access to your money at all times when making a trade.

Fraudulent behaviour

It is a known fact that physical money has been forfeited a number of times over the years. Although it is seen to that the forfeited money does not enter the economy, there are cases in which transactions are done with forfeited money. While making use of cryptocurrencies, there is no way of fraud being committed. As cryptocurrencies are digital and do not have a physical presence, there is no way of forfeiting the currency.

Bank fees

If you receive your bank statement at the end of each billing period, you will see that your bank charges you a substantial fee for all the transactions incurred during a specific billing cycle. If you make use of cryptocurrency, you pay far less on transaction fees and in most cases, you are not charged at all, thus saving you money in the long run. As cryptocurrencies are seen as a global currency with no roots in a specific country or continent, it is impossible to stamp a fee for transacting on it.

Global reach

Traditional banks have many banking offices you can go to if you have a query about your money or account. For some, this is a challenge, especially in underdeveloped countries as not everyone can get to a banking facility when needed. On the other hand, when you make use of cryptocurrency, you can access it anywhere from your mobile phone. As the world is turning into a digital frenzy, almost everyone on the planet has access to a mobile phone and can access their crypto money much easier than having to go to a banking facility.


One downside to cryptocurrency is that it is still in its infant stage. When you make use of physical money, you can purchase anything, go anywhere and withdraw cash anytime. With digital currency, you can’t yet pay for simple items you need such as food and utilities. Although some companies already accept cryptocurrency payments as a form of payment, not all companies feel the same way about digital money. While this will become a reality in future, you are yet to be able to buy a sandwich with your digital currency.

From the above-mentioned points, it is evident that cryptocurrencies offer you more benefits and will make your financial experience easier to handle. However, the world is still divided and has different outlooks on the acceptance of digital money. For seasoned investors, this form of currency is a gold mine of such as digital currencies are highly volatile and promises a great deal of profit. While investors invest in both physical and digital forms of money, finding profit, at the moment, seems to lie in digital money rather than in the physical form.

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