What Is Digital Currency ?

Just as we presently access our bank accounts electronically and conduct transactions such as purchases, sales, and transfers in the digital sphere, digital currency similarly exists solely within the internet, digital, and electronic domain. Unlike bank accounts, digital currencies lack physical form and cannot be physically held in your hands. To utilize digital currencies, you must use a computer or mobile device connected to the internet to access your account. Digital currencies have the same functionality as fiat money (fiat money is a type of money that is issued by governments and its value is guaranteed by the government, such as Dollars, Euros, Rials, Rubles, etc.). You can use them to buy goods or pay for services. These currencies offer the potential for immediate international transactions. With digital currencies, individuals in East Asia can transfer currency to someone in America in the shortest possible time.

Digital Currency Types

Digital currency is a comprehensive term used to describe different types of currencies available in the electronic space. In general, there are three different types of digital currency, which we will examine below:

• CryptoCurrencies : Cryptocurrencies represent a subset of digital currencies that employ encryption techniques and blockchain technology to verify and uphold the security of transactions within the network. Furthermore, cryptography plays a crucial role in the generation and administration of the creation of these currencies. Bitcoin, TONCoin and Ethereum are three famous types of cryptocurrencies.

• Virtual Currencies : Virtual Currencies" (Virtual Currencies) Virtual currency is a type of digital money that is created and controlled by a specific company or organization. These currencies are usually used to buy goods and services from a particular company or organization. Also, virtual currencies are centralized and do not use blockchain technology. For instance, a major gaming company might develop its own virtual currency, which users can utilize to purchase and trade in-game items.

• Central Banks Digital Currencies : Central bank digital currencies (CBDCs) are regulated digital currencies issued by the central bank of a country. CBDCs have the potential to complement or even replace traditional fiat currency. Unlike fiat currency, which exists in both physical and digital forms, central bank digital currencies exist only in digital form. Countries such as England, Sweden, and Uruguay are among those that have plans to introduce a digital version of their native currencies.