What is digital currency exactly?
Digital money is any payment only in electronic form (or digital currency). Digital money is recorded and transmitted through online networks but lacks a physical form like a dollar bill or coin.
What different kinds of digital currency are there?
Digital money can be customized to serve many purposes due to its technological underpinning. The three types of digital money are cryptocurrencies, central bank digital currencies, and stablecoins, in addition to being a digital version of fiat money.
What are a few advantages of digital money?
Digital money streamlines and expedites remittance and money transfer mechanisms. Additionally, eliminating intermediaries like banks from the equation makes it simpler for central banks to enact monetary policy. Because they are censorship-resistant, cryptocurrencies prevent the movement and use of virtual currency on their blockchains from being monitored.
What are some of the disadvantages of using digital money?
Access to digital currency systems is possible for hackers. By skillfully attacking such systems, hackers can destroy crucial financial infrastructure and a nation’s economic base. Using centralized digital money systems, such as those employed by CBDCs, can make tracking and tracing user data possible, putting their privacy at risk.