Digital Currencies
In this world of technological advancements, are digital currencies going to replace fiat money?
We already see cryptocurrencies used in online casinos. Bitcoin, Ethereum, Litecoin, and Monero are among the top virtual monetary units that gamblers use. Try playing live lobbies in these web gaming houses if you own any of the four new money types.
But first, let’s look closer at these electronic versions of cash.
What Is Digital Currency?
Digital currency is money that’s available in electronic form. This practice isn’t new since most countries only have a small percentage of their funds circulating in physical form. They store the rest of their reserves in computerized banking systems.
For instance, the U.S. Federal Reserve reports that the amount of cash in use is only one-tenth of the total supply.
Difference Between Digital and Electronic Currency
What makes digital currencies different from electronic money held in bank accounts is that they don't exist physically.
When you make an ATM withdrawal, you’re taking funds from your computerized balance in cash. However, if you hold cryptocurrencies, you can only transfer and exchange them digitally. You can’t touch and feel them as you do with banknotes. Virtual funds only circulate on computer networks.
So, when you go out and buy something offline, instead of paying cash, you’ll use your smartphone to transfer the payment to the retailer.
Trending Digital Currencies
You’ve probably heard of Bitcoin because it’s the original digital currency with millions of units in the market. Its growth and popularity have spurred the introduction of thousands of new cryptocurrencies.
Here are some of the other types you’ll find in the virtual financial arena:
- Ethereum
- Litecoin
- Bitcoin Cash
- Stellar Lumens
Digital Currency Benefits
Here’s why cryptocurrencies are trending:
- Faster transactions. You can complete payments instantly using digital currency compared to traditional means such as wire transfers, which can take days.
- Lower international transfer fees. Moving money from one country to another is expensive when you go through the current channels. You’ll pay high charges for the transaction. Cryptocurrencies allow you to transfer funds internationally faster and cheaper.
- You have 24/7 access. Digital currencies work round the clock. You won’t experience the usual delays because banks have limited business hours and working days.
- No requirement for banking facilities. The FDIC says that over 7 million Americans don’t have a bank account. These people pay high fees when they cash their paychecks and make payments through money orders or remittances. Virtual currencies make it easier and affordable to conduct those transactions.
Disadvantages of Digital Currencies
There are still obstacles to overcome before these forms of electronic money become the norm:
- Too many types. While the boom of cryptocurrencies offers the public lots of options, there are limitations in each of them. It’s challenging to find a suitable system.
- Digital currency prices have high volatility. The value of cryptocurrencies fluctuates a lot and can change suddenly. This uncertainty is why businesses are reluctant to use it for their activities. No one wants to lose a percentage of their financial asset overnight.
- Complicated setup. People currently must learn how to perform basic tasks when using virtual funds. For instance, opening an electronic wallet and securely storing their assets. We need a more straightforward process before we can widely adopt digital currencies.
The Future
Digital funds are progressively changing how society thinks about money. The growth of cryptocurrencies such as Bitcoin, Ethereum, and thousands of others has central banks considering their virtual monetary unit.
There are signs that our current financial system is facing a transformation, and it won’t be long before hard cash is a thing of the past.
