Digital Currency Definition
Digital currency, also known as digital money, is a type of currency that is available in the digital form only. It is not tangible like coins or notes, hence its existence is only electronic. Digital currency can be used for online transactions and in certain cases, it is controlled and governed by digital methods. Some digital currencies are cryptocurrencies, but not all of them follow the decentralized paradigm of cryptocurrencies.
Digital Currency Key Points
- Digital currency is a form of money that is purely electronic.
- It can be used to carry out transactions online and even offline in some cases.
- Digital currency may or may not be regulated by a central authority.
- It is not tangible and not visually perceivable as traditional fiat money.
- Despite being referred to as ‘digital currencies’, not all fall under the category of cryptocurrency.
What is Digital Currency?
Simply put, digital currency is a type of currency that is non-tangible and purely digital in nature. Unlike physical currencies such as coins or banknotes, digital currency only exists electronically. It’s a form of currency that can be used to carry out transactions online and even carry out physical transactions in some cases, with the use of credit cards and mobile apps.
Why is Digital Currency important?
Digital currency is crucial in the modern world due to its convenience and versatility. With the rapid advancement of technology and the increasing digitization of processes, digital currencies offer ease of transactions and savings on transaction fees. They demonstrate the potential for financial inclusion, and are becoming valuable tools for reducing poverty and boosting economic growth in many parts of the world.
When and How to use Digital Currency?
Digital currencies can be used for online shopping, investment purposes, transferring funds, and hundreds of other applications. They are often used through a digital wallet installed on a user’s computer or smartphone. Users can acquire digital currencies through exchanges, as a form of payment, or through a process known as ‘mining’.
Who Uses Digital Currency?
Anyone who conducts online transactions could potentially be a user of digital currencies. Businesses, particularly online platform, use them for accepting payments. Remittance-based services and workers in the gig economy use digital currencies to receive payments from across the globe.
Where is Digital Currency used?
Digital currency is primarily used over the internet for online transactions. However, there are also specific physical locations, like certain stores and restaurants, which accept digital currency as a form of payment. The usage is widespread in all parts of the world, from developed nations like the USA to emerging economies in Asia and Africa.
