Digital currency can be regarded as a virtual currency based on node network and digital encryption algorithm. The core characteristics of digital currency are mainly reflected in three aspects: ① Because of some open algorithms, there is no issuer in digital currency, so no one or organization can control their distribution; (2) Because the number of algorithm solutions is fixed and the total amount of digital currency is fixed, the possibility of inflation caused by too much virtual currency is fundamentally eliminated; ③ Because the transaction process needs the approval of all nodes in the network, the transaction process in digital currency is safe enough.

The emergence of Bitcoin poses a great challenge to the existing monetary system. Although it belongs to virtual currency in a broad sense, it is essentially different from the virtual currency issued by network enterprises, so it is called digital currency. Digital currency compares with electronic currency and virtual currency in terms of issuer, scope of application, number of issues, storage form, circulation mode, credit guarantee, transaction cost and transaction security.

Compared with the traditional way of bank transfer and remittance, digital currency transaction does not need to pay the third party, and its transaction cost is lower, especially compared with cross-border payment that provides high fees to payment service providers.