A digital currency is any currency that is available entirely in electronic form. Currencies’ electronic types already predominate a large number of nations’ financial systems. Digital currency, however, is exclusively exchanged through virtual means and does not leave a computer network.
The three major varieties of digital currency are cryptocurrency, central bank digital currency (CBDCs) and stablecoins.
The foundation of cryptocurrency is provided by blockchain technology which is the most usual form of distributed ledger used by digital currencies. According to CoinMarketCap, the availability of cryptocurrencies is more than 21,000.
What Are The Advantages Of Digital Currency?
Here are some of the advantages of digital currency:
Faster Mode of Payment
Digital currency can make your payments much faster than current means like automated clearing houses or wire transfers that take days for financial institutions to confirm a transaction.
Cheaper Global Transfers
At times global transactions can get very expensive. Individuals are charged high fees to move funds from one nation to another, especially when it includes currency conversions. Digital assets could interrupt this market by making the transaction cost-effective and quick.
24/7 Availability
Digital currency transactions work at the same speed i.e. 24 hours a day and seven days a week. On the other hand, existing money transfers frequently take more time during weekends and outside normal working hours because banks are shut and cannot confirm transactions.
No Manufacturing Required
Physical currencies have many requirements such as the establishment of physical manufacturing facilities. Whereas, in digital currencies, no such expense is involved. Also, digital currencies are immune to soiling or physical defects that are present in physical currency.
Well-organized Government Payments
If the government developed a central bank of digital currency, it could send payments like child benefits and food stamps, and tax refunds to people instantly, rather than trying to figure out prepaid debit cards or mail them a check.
