0984
Digital Currency
Internet and Its Uses · 4 question types
Exam Frequency Analysis
Past paper frequency (2018 to 2024)
This topic accounts for approximately 3% of your exam marks.
increasing
Rare
Increasing3%
Blockchain and cryptocurrency are a newer addition; questions are growing as the topic becomes more established.
A side-by-side comparison covers the main differences exam questions ask about.
| Feature | Traditional currency (e.g. pound, euro, dollar) | Cryptocurrency (e.g. Bitcoin) |
|---|---|---|
| Physical form? | Cash exists as banknotes and coins; balances also held in bank accounts | No physical form: exists only as digital records |
| Who controls it? | A central bank or government | Decentralised: a network of computers around the world |
| Where transactions are recorded | In private bank databases | On a public blockchain that anyone can inspect |
| Authority for issuance | A government / central bank prints or mints new money | Mined or issued by the protocol according to fixed rules (no human decides to "print more") |
| Identity of payer/receiver | Bank accounts are linked to real names and addresses | Pseudonymous wallet addresses; harder to link to a real person |
| Speed of international transfers | Slow (hours to days through traditional banking) | Fast (minutes, sometimes seconds) |
| Transaction fees | Set by banks and payment networks | Set by the network; can be very high when network is busy |
| Reversibility | Banks can reverse fraudulent or mistaken payments | Irreversible once confirmed on the blockchain |
| Volatility (against everyday goods) | Stable in the short term (small annual inflation) | Often highly volatile |
| Legal status | Legal tender everywhere it is issued | Varies by country (legal in some, banned in others, taxed in many) |
| Backed by | Trust in the issuing government | Mathematical security of the protocol and the network of participants |
Trade-offs in a single line
- Traditional currency is stable, regulated and reversible, but centralised and slow internationally.
- Cryptocurrency is , fast and (often) cheap to send globally, but volatile, irreversible, and less protected if something goes wrong.