The difference between digitised and digital money

Michael Parsons outlines the key differences between money we transact with every day, and the increasingly popular digital money. 


It's important to understand that most money today is already digitised and regarded as digital. The vast majority of funds transferred B2C (and practically all funds transferred B2B) is merely digital account values being passed from bank to bank with no corresponding physical money involved of any kind. Indeed, actual physical cash (notes and coins) is better thought of as a representative token of digital account values.

While Bitcoin is purely digital money, it is not so different from normal (digitised) money anyway. Except that bitcoin does not rely on a trusted central authority (bank) to maintain the record of each individual holding; instead the record of each holding is decentralised and recorded in the Blockchain (a distributed ledger) maintained by trustless nodes in a distributed transparent network and 'regulated' by the underlying mathematics and coding in the Bitcoin software protocol. 

And indeed, because 95% of fiat money is already digitised, it should move as quickly as all other digital information that is not centralised (emails, documents, images etc)- that is, near-instant. Society doesn't accept communications to be impeded by artificial slowness, yet it has (until now) permitted this inefficiency when it comes to money. This is in part due to the fact that most people do not realize their money is already 'digital' and ought to have no excuse for slowness, and it is also in part because they have not had any alternative. As Bitcoin is now a real alternative that obliterates all delays in payments, society's willingness to patiently accommodate delays will be limited. 

No business or individual would relegate itself to physical letters and postage once email became available, and the same phenomenon should be expected when it comes to money.


Digitized Money (USD, EUR, etc)

Digital Money (Bitcoin)




Who creates it?

Central Banks

Bitcoin software

Who keeps track of it?

Banks and companies

Decentralized network

Who regulates it?



Can it be inflated?

Yes, supply unlimited

No, supply limited

Who stores the funds?


Individuals or e-wallets, e-banks

How is it transfered?

Various bank networks

Peer-to-peer network

Are transfers reversible?



What if it's stolen?

More is created

It's gone

Can it be insured?


Yes, but not yet

Can it exist in physical form?

Yes, bearer bonds (cash, etc.)

Yes, bearer bonds (Casascius coins, etc)

Can it be counterfeited?



Can it be blocked/frozen by 3rd parties?



Attached to personal identity?



Restrained by geography?



Requires trust in 3rd party?



Carries fees for transfers?



Open 24/7/365?



Michael Parsons had his bitcoin/blockchain epiphany upon reading an article in the Times on 3 April 2012. He is a Blockchain & Digital Currency Advisor and experienced Presenter. 

Michael is a UK qualified Chartered Accountant (FCA) and previously worked as a bank CFO and Banking Consultant.  His Blockchain and digital currency knowledge is supported by 25 years experience of traditional banking, money and finance.  Michael’s operational banking experience gives him a unique perspective on the Bitcoin/Blockchain Protocol and the emerging Bitcoin and Blockchain Ecosystems. 

Currently leading startups in a Bitcoin spread-betting/CFD company, ByteBet Ltd, to include futures & options, Michael is also involved with Xeroclear Ltd a UK private company which uses results from computer science and cryptography to implement an entirely new type of (which will be either a bespoke Blockchain or Blockchain inspired) decentralised platform for the clearing of financial instruments. 

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