The virtual money in this case (an online statement) doesn’t actually exist, it’s just a value system used by the bank to be translated into hard cash if ever you have to make a withdrawal. But that virtual currency isn’t a thing in reality, even if on the backend it might have its own funky way of working in the financial system.
So how does that compare to crypto? Like with any currency, value is determined by 1) how useful it is to us and 2) what we say it’s consequently worth, so what’s the conceptual difference between, say for example, 20 chainlink (for example) “dollars” and 20 virtual dollars in my bank that represent cash?
Are they *actually* different things, and if so, how?
In: Technology
They’re different in many ways.
For one, your balance in a bank account is literally nothing more than a number on *the bank’s* ledger. Without the bank–its information systems, its infrastructure, its network and its PERMISSION–you can’t spend or withdraw your money. With cryptocurrencies (proper ones, at least) any two parties can exchange tokens/coins/currency at any time without reliance on a centralized authority. Each party keeps his own copy of the ledger* which is cryptographically guaranteed to be accurate.
* In practice, it’s not uncommon for individuals to delegate “keeping your own copy of the ledger” to a service or to the network itself. A crypto wallet on a mobile phone, for instance, doesn’t typically have the resources to maintain a ledger of all transactions that ever occurred, so it may connect to a server somewhere for that function. But in principle cryptocurrencies are designed to be decentralized, meaning you *can* operate a wallet entirely on your own, and doing so actually makes the network more resilient and more secure.
Check out r/Cryptocurrencies and r/BitcoinBeginners if you haven’t already.
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