Banking has been around for thousands of years, in different forms. From bartering animal skin to gold, banking has evolved to what it is now: a robust system with an infrastructure that is both widespread and impressive. However, over a period in time and with various exigencies, the process of banking has become more officious and rudimentary. Bureaucratic oversight has increased and that has meant more paperwork, fees, and delays. Though it should be mentioned that brick and mortar banking institutions did play its part in increasing efficiency and making the entire process more tech-centric, it remained shackled to its legacy, thereby, limiting its scope.
In such times, arose the concept of blockchain and riding on it, the cryptocurrency. It was simply a digital currency with no tangible form.
What is Digital Currency?
Digital currency is a form of currency that is available only in digital or electronic form, and not in physical form. It is also called digital money, electronic money, electronic currency, or cybercash.
What are the advantages of Digital Currencies?
- Digital currencies are currencies that are only accessible with computers or mobile phones, as they only exist in electronic form.
- Since digital currencies require no intermediary, they are often the cheapest method to trade currencies.
- All cryptocurrencies are digital currencies, but not all digital currencies are crypto.
- Digital currencies are stable and are traded with the markets, whereas cryptocurrencies are traded via consumer sentiment and psychological triggers in price movement.
A sneak peek
Digital currencies are intangible and can only be owned and transacted in by using computers or electronic wallets connected to the Internet or the designated networks. In contrast, physical currencies, like banknotes and minted coins, are tangible and transactions are possible only by their holders who have their physical ownership.
Now since digital currencies have no tangible form, counterfeiting it is impossible. This brings down the attempt to make fraudulent transactions to near-impossible levels.
Like any standard fiat currency, digital currencies can be used to purchase goods as well as to pay for services, though they can also find restricted use among certain online communities, like gaming sites, gambling portals, or social networks.
Because of such inherent advantages, digital currencies have become a rage among new-age tech enthusiasts the investors, who are ever on the lookout for greener pastures. Bitcoin and its ilk have fashioned a revolution which is the future we would love to believe in.