Digital currencies are a payment method in electronic form; they are not tangible. Digital currencies are also commonly known as cyber cash, electronic currencies, or digital money.
Electronic money can be transferred between users or entities with the facilitation of technology, like everyday computers and electronic wallets which are connected to a designated network. Digital currencies, like any other standard fiat currency, can be used to pay for services and purchase goods; however, at present, they primarily find use among specific online platforms such as social networks, gambling portals, or gaming sites. The early adopters of electronic currencies have opted for it because it allows instantaneous transactions as well as a borderless transfer of ownership, thereby allowing an easy means to garner a global user base of users.
However, there’s a lot more to digital currencies than just the ability to move value across borders.
The Evolution of Digital Currencies
Traditional currencies are perceived as highly opaque as a few people control their supply and surplus creation. Digital currencies represent freedom; a constant currency from pandering and political interference from special interest groups. No individuals, governments, or corporations have control over them. The money dies or lives on the merits of its complex code based on the ability of the developers and cyber attacks. It has public rules and if one isn’t interested, then he/she need not consider.
Unlike conventional currencies where some individuals will decide on the currency’s operation, digital currencies create consensus mechanisms and anyone can play a role in the network that supports the currency.
Fundamental transparency and self-repair of operation is a masterpiece evolutionary benefit and digital benefit which electronic curries, like Bitcoin, are loaded with. Traditional currencies linked to nations or dominions have underpinned the fit near the global economy. We are approaching the time where global currencies that are unrestricted with such ancient notions and domestic politics.
As the market broadens and becomes borderless, so the currencies should follow suit. Emerging digital currencies are strategically inclined to facilitate the secure global transaction through open and trusted processes.
What's Good About Digital Currencies?
Cybercash is based on blockchain technology, which has the potential to disrupt currency and financial services by reducing the complexity and costs of financial transactions while augmenting transparency. The positive implications of blockchain technology supersede those in financial services.
Beyond the benefit of the technology, digital currencies offer a lot of benefits on the basis of their presence on the web and existence as a transferable code that cannot be replicated.
Lower Transaction Fees
Costs associated with both credit and debt can be very steep, more so with international use. They can go beyond 5% on a single transaction on international use and hover around 3% for domestic use. People do not see these fees because it’s the merchants who pay the fees. Merchants, though, pass over these fees to the customers. So, products essentially carry a credit card tax as merchants pass over their fees to the masses.
With wider adoption of digital currencies, the credit card fees can be removed and our daily purchases can be made cheaper.
Send Cashless Remittances
Another strong use case for digital currencies is non-cash remittance. SureRemit is an example of a business that enables its users to make cashless payment remittances worldwide. Those in the Diaspora can purchase tokens for electronic money via utility bill payment or mobile top-ups. This is used to expand into new markets and improve its channels.
Greater Client Trust
Every year, multimillion-dollar companies which store users’ financial data have been exposed to cyber-attacks and the customers whose payment card information was stored in the networks were vulnerable.
This can’t happen in the case of digital currencies. Your clients don’t expose to their credit card numbers; they temporarily encrypt code to process the transaction. Your client’s financial data is privately kept and secured. Digital currencies allow users to simply use a private key to temporarily permission a payment; the key is retained by the user and so no hackers can ever access the key even if they hack a company’s computers.
This is a huge challenge in most developing countries where central banks inflate the currency to keep their head above water. In the US, some contend the inflation rate a bit higher on some items than what the standard consumer price index stipulates.
With some electronic money, there is no inflation due to the algorithms in the system and controlled quality limits. Bitcoin, for example, the flagship digital money, has a hardset limit of 21 million coins. This is enforced by code.
How Are Digital Currencies Being Used Today?
Travel the World
With the explosive growth of the digital currency ecosystem in the past decade, it is now possible to travel the globe by spending digital currencies.
Established tour and travel agents like Destinia and CheapAir accept electronic money as a payment method to book hotels, car rentals, and flights. The rapid growth of the digital currency market means those on tour can comfortably convert their cyber cash into local currency in major cities across the world.
Earn to Post Content
Some of the world’s first blogging platforms and incentivized social media enable content creators to receive financial rewards through digital currencies for curating on the network and posting content by upvoting top-notch quality content. Recently, even Twitter announced that it may enable Bitcoin tipping into its platform.
Alternative Store of Wealth/Censorship Resistant
Assets and bank accounts can be easily frozen in jurisdictions with a dubious rule of law and questionable power restrictions on the state.
Digital currency act as a censorship-resistant and an alternative store of wealth that is only accessible to an individual with private keys. Hence no electronic cash can be frozen by authorities.
Faster Funds Receipts
It is exorbitantly disturbing when it takes days or weeks to see funds to reflect in your bank account. The processing speed associated with digital currencies is faster and almost instant. It is much quicker than the time taken by legacy financial systems.
By using digital currencies, you eliminate the fraud that comes with a chargeback. Consumers will, at times, order a product and use it, only to request a refund from credit card provider for falsified reasons. At times, businesses take this as the cost of sustaining the business. By agreeing on payment via electronic money, there is no chargeback. Sales are complete when a transaction is received from your client.
What Is The Future Of Digital Currencies?
Digital currencies have been making news since their inception, and they have brought massive change in the financial transaction market. According to economic experts and tech gurus, the trend of using digital currencies is the future but how this digital asset will affect the market is to be decided.
Beyond generating efficiency in terms of reducing transactional cost and time needed to deliver funds, digital currencies will offer distinct advantages including the ability to natively control protocol spending regulations as a single transaction unit.
With technological advancement over the past years, digital currencies, with their heightened privacy attributes, immutable nature, and decentralized consensus, have caught the world’s attention.
Currently, the electronic currencies continue to go from strength to strength, with investors undaunted by the possibility of the market being a mere bubble. More adopters are flocking in the new market, fueled by more than just a hope of gaining high retains as they believe in the true value of the decentralized digital currency.