Digital money is an intangible entity. It is another platform for processing payments. It includes cryptocurrencies and virtual currencies. Bitcoin & Ethereum has been booming in the recent times.
Meaning of Digital Currency
Digital money does not involve intermediates thus transactions occur directly. Central authority such as banks fixes monetary limitations.
Thus, digital currency is different from the fiat currency in many aspects. The best feature of a digital coin is instant transfer. Digital currency and cybercash can be used inter-exchangeably. There are several niches that make money with a Digital Currency.
Digital currency same as traditional money serves multiple purposes. It can be used to buy any goods or avail any service. For platforms such as social network or gaming, Bitcoin is not an option. David Chaum first proposed the idea of digital cash in 1982.
Since then many platforms have tried to make an impact globally such as PayPal, e-gold, Q coins, etc. The most widely accepted digital currency so far is Bitcoin.
Digital currency is a kind of monetary balance. Either a device can store the currency or its processing occurs on online networks. Digital wallets are available for storing electronic currency.
Risk associated with digital currency
The digital currency has caught the attention of many cybercriminals. The concept of cryptography is definitely having an edge but cyber crimes have always surprised the developers.
Since digital currency is rotating only in networks, there is also a fear of currency volatility. Another issue with digital currency is beneficiary identification.
Digital currency has many other limitations too. Physical currency allows the user to earn interest by submitting money in the bank. In case of digital currency, no such benefits are available.
Digital currency poses major challenges for banks, financial authorities, fiscal authorities, and statistical authorities. Some of the countries have dissuaded users against the digital currency. Thus, it still faces the challenge of acceptance by the people and the government.