Digital currencies, also known as e-money, are now more popular than ever. Until recently, digital currency lacked the security to eliminate the need for paper money. However, with the rise of the internet and the advent of blockchain technology, this is no longer the case. Today, digital money is set to change the market forever.
Importantly, digital currencies fill all the uses of traditional forms of money. You can purchase goods or pay for services via these technologically superior financial alternatives. Digital money provides users with instantaneous transactions and more transparency in the market. As such, more countries plan to unveil some form of digital currency in the next couple of years.
What is a Digital Currency?
Unlike their traditional counterparts, digital currencies only exist on the internet. This new form of money is completely intangible, you can’t touch or feel it. It only exists in the digital realm. Every aspect of their issuance, transfer, and record-keeping is digital. Consequently, you will need an internet supported device to access these funds.
Advantages of Digital Currency
Digital currencies bring significant advantages to the market. For one, they provide users with a more streamlined alternative. Digital currency payments as both instantaneous and low-cost. Additionally, they introduce a higher level of record-keeping and transparency to the sector.
Digital currencies accomplish these tasks via a peer-to-peer transaction protocol. Just like when you hand someone a piece of fiat currency, digital currency requires no intermediaries to function. This reduction of third-parties within the transaction increases efficiency. Additionally, it significantly reduces transaction times and costs.
These advantages really come to light when discussing cross-border payments. If you have ever attempted to send money internationally, you know that the process is time-consuming and involves multiple checks. Additionally, the costs of sending money internationally can be as high as 7 percent according to reports. In fact, your pricing will depend heavily on your choice of financial institutions.
Also, the international exchange rate can eat up a large percentage of your funds when sending money across borders. Digital currencies can eliminate these fees as many operate in a borderless fashion. Cryptocurrencies such as Ripple’s XRP specifically eliminate these concerns for major banking institutions seeking to send funds.
History of Digital Currencies
An American computer scientist by the name of David Chaum is credited with developing the first concept for digital currencies way back in 1983. By 2990, Chaum created a working model of his theory dubbed – DigiCash. The concept was years ahead of its time. Consequently, it never gained the momentum needed to survive in the market.
The first recorded public use of digital currency in a wide-scale emerged in 1996. The currency,…
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