Everything is at fast paced because of the innovation brought by technology. It actually helps in a lot of industries, especially on the business side. One of the trends that technology has contributed is Digital Currency.
It is an internet based form of currency or medium of exchange. It can be associated with traditional currency, Forex exchange and remittances, because of the similarity of their functions which is primarily on buying physical goods and on paying services.
There are times when it is mistaken with Virtual Currency. The latter, which is defined by the European Central Bank as “a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community”, is different from Digital Currency because it does not have all the attributes of real currency. Virtual currencies cannot be used to buy physical goods and cannot be converted into traditional or fiat currencies.
This can also be used with in-person payment at physical establishments and can also be converted into fiat currency, with minimum fees to no fees. According to investopedia.com, Fiat Money is declared by the government to be a legal tender and is not backed by a physical commodity. Its value can also be derived from the relationship between supply and demand. Moreover, it allows the instantaneous transaction and borderless transfer-of-ownership, which is better compared with Fiat currency.
Fiat currencies are limited by their geographic regions. This concern is solved by digital currencies because these are international currencies with no borders, and is only possible online. Users will no longer have to pay increased cost in international payments and money transfers because they can directly transfer funds, pay bills, and buy goods through digital currency. Also, dealers cannot charge extra fees on the consumer without their knowledge.
Digital money transfers are also faster compared to traditional wire transfers that can take a long time to process. Digital transactions can take just about a few minutes to complete, depending on the transaction process of the platform. Also, it is more convenient compared to over-the-counter bank transactions which have limited time and takes a lot of processes to take before it can be completed.
Security is also better with digital currency. It uses a certain system which let the user take hold of their accounts, making them autonomous and self-regulatory. Information can be backed up and encrypted to guarantee the safety of your money. Unlike fiat currencies that are controlled by the government, some digital platforms do not have central authority regulating them. Some digital currencies, like Ripple and Radar, are still monitored and checked by specific individuals and/or companies. These are also attractive to those who prefer private financial dealings because most of the digital currency systems are untraceable to individuals and companies.
It also reduces the possibility of credit card fraud. Personal customer information and credit card numbers can be stolen and be used to make possible unauthorized purchases. Since it is a purely digital transaction, the receiver of the payment has no access on the personal information of the sender, and information fraud can be avoided.
This trend offers many advantages that cannot be found on fiat currencies. In fact, it has a lot of improvements points to make, but if you are looking for easier, more convenient, and more secure transactions, it will surely be a better option than traditional transactions.