Digital Currency: The basic.

Digital Currency: The Revolutionary

Digital money (or digital currency) refers to any means of payment that exists in a purely electronic form. Digital money is not physically tangible like a Naira note or a Kobo coin. It is accounted for and transferred using online systems. One well-known form of digital money is the cryptocurrency Bitcoin and Others. Digital money is exchanged using technologies such as smartphones, debit cards, and online cryptocurrency exchanges. In some cases, it can be converted into physical cash through the use of an ATM.

This Generation is now very familiar with the digital currency that we now have them in our online bank accounts that we can send and receive from anywhere in the world, we have been so used to it that we pay and accept it as a means of payment just like our physical cash and even change it in exchange for our regular physical cash at the ATM Stands but Digital Currencies have proved to be of more advantage over the Physical cash in transaction processes.

Digital money can streamline the current financial infrastructure, making it cheaper and faster to conduct monetary transactions. It can also ease monetary policy implementation by central banks. Examples of types of digital money are cryptocurrencies, central bank digital currencies, and stablecoins.

Central Bank Digital currencies

Central bank digital currencies (CBDCs) are currencies issued by the central bank of a country. They are separate from fiat currencies, which are also backed by the authority and credit of a central bank, and are another obligation of the institution. CBDCs ease monetary policy implementation by removing intermediaries from the policy by establishing a direct connection between the government and the average citizen. Banks and financial institutions responsible for distributing national currency are no longer required in the process.

Stablecoin

Stablecoins are a variation of cryptocurrencies and were developed to counter the price volatility of regular cryptocurrencies. Stablecoins can be likened to a form of private money whose price is tied to that of a fiat currency or a basket of goods to ensure that they remain stable. They can be a proxy for fiat currencies, except they are not backed by governmental authority. The market for stablecoins has exploded in recent times. As of February 2021, 200 stablecoins had been released or were in development.

Cryptocurrency

Cryptocurrencies are digital currencies designed using cryptography. The crypto wrapper around a digital currency provides enhanced security and makes transactions tamper-resistant. The most popular cryptocurrencies are Bitcoin and Ethereum. Since 2017, the popularity of cryptocurrencies as an investment class has skyrocketed their value and the overall market capitalization of crypto markets. By July 2021, the market cap of cryptocurrencies had surpassed $2 trillion.

Will like to share the Advantages of Digital Money

• Digital money eliminates the need for physical storage and safekeeping that is a characteristic of cash-intensive systems. You do not need to invest in a wallet or bank vault to ensure that your money is not stolen.
• Digital money simplifies accounting and record-keeping for transactions through technology. Therefore, manual accounting and separate entity-specific ledgers are not necessary to maintain records of transactions.
• While it has already shortened the amount of time and the cost required to transfer money across borders, digital money has the potential to further revolutionize the remittance industry by eliminating intermediaries and further reducing the costs associated with cross-border transfers.
• Digital money removes intermediaries in the implementation of monetary policy and makes it possible to include groups of people who were previously excluded from the economy. For example, those who are unbanked can still participate in an economy by using digital money present in their online wallet or mobile phones.
• In the case of cryptocurrencies, digital money transactions can become censorship-resistant, meaning they can be impervious to tracking by the government or other authorities.

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