Introduction to Digital Money
In this digital era money is also digitalized. Digital money like digital currency which exists only on
electronic shape. There are many names which are explaining the digital money, like Crypto, Bitcoin,
Ethereum, and central bank Digital Currencies (CBDCs). The concept of digital money is changing and
rising with the usage of online banking and mobile apps transactions. Digital banking is entirely different
from the traditional banking systems. Because it is not in physical shape like cash.
Digital money is used for smooth, rapid and easy transactions, without any distance. With the passage of time digital currency is now in trend but it is going to be compulsory part of this era. Here we will discuss in brief of different
types of digital currencies and its props and cons on economy, and we will also discuss the future
potentials. Digital money is not only altering the financial methods but also impacting on transfiguring
the economy. Let’s to be in brief.
1-Types of Digital Money
Varies form of Digital Currencies which are depend on electronic shape. Each has a specified practices,
and insinuations. Some basic types are being explained.
1-1 Cryptocurrencies
Crypto is decentralized digital money which is use for cryptography for secure transactions. Which is
being operated on block chain technology and distributed ledger maintained by overseas network of
Systems. Most commonly known as Bitcoin, but there are many of others, with Ethereum, Ripple and lite
coin. Importantly there is very secure and trustworthy with transaction wise and proper control on
transaction and his cost. However, they are frequently focus to high instability and supervisory inspection.
1-2 Central Bank Digital Currencies (CBDCs)
Central bank digital currencies (CBDCs) has been directly controlling regulating and also issuing by
central Bank. CBDCs are being controlled by the State and intended to operate as legal loving. They are
presenting a significant role on financial scenery, directing to modernize transaction structure and upraise
the financial presence.
1-2-1 Features of CBDCs
CBDCs are being controlling by the CB and guaranteeing on his sustainability and secure transactions.
This support is distinguishes them from crypto which can be extremely instable. CBDCs are being used to
cover the legal affairs like transactional, settle down the debts and Taxes ets. CBDCs are being
characterized by Digital method and occur in Digital Wallet which are present by financial organizations.
Here are two method retail and whole sale CBDCs are being used. Retail CBDCs is utilizing for Public
dealing and Wholesale CBDCs is proving for in inter banking services. For security point of view, digital
ledger tracking the transactions histories and minimizing the fraudulent activity.
1-3 Virtual Currencies
Virtual Currency is not controlled by the central policies. It is also the form of Digital currencies. Virtual
currencies are developed and managed by the individual financial institutions, and are being utilized on a
specific online stages. Virtual currency have own identity and has been separating from the other medium
like crypto. Virtual currencies are classically limited choice to specific places, such as gaming coins, or
cards having a specialized please that can be utilized. As discussed that virtual currencies only initiate and
controlled by the institution. The rules and regulation where virtual currency controlled it depends on
financial institution. Tokens, loyalty points, are also form of virtual currency under ling digital Money.
1-4 Stablecoins
Stable currency are also the form of Crypto, which is proposed to maintain the value in reserve assets like
money and gold etc. this practice increase the strength in daily transactions, analyzing with traditional and
digital figures also increasing the dependence on digital money because its reduce cost factor thus the
reason its increasing demand in commercial needs.
Stability in digital space providing the opportunity to reduce the cost and improving the financial matters.
Directly impacting on economic factors. Where we are enjoying the digital space with financial matters,
there is also have risk for users and officials.
2- Advantages of Digital Money
Digital money improving day by day where financial transaction are operating smoothly the reason
people are trusting him. Online transaction are more secure with minimum time frame and have proper
evidence which can be used for recover the history in future. Digital Money which is on one click reduce
the fee comparatively the traditional method, like instruments (cards, chaques books). Maximizing the
profit because its reduce cost.
Transactions are being secured by encode and a blockchain technology. The dispersed structure of crypto
reduce the risk of fraudulent activity. The way financial transactions are secured and safe for future
record.
2-1 Reduction on Exchange Rates.
This time digital money is not depending on conventional exchange rates, consumers are reducing the
cost by utilizing the international pathway. The structure abridges the international and commercial trust,
developing the secure business worldwide.
2-2 Secure Cash flow management
Rapidly access on cash flow to meet the operations, initiating the business investment without any further
delays. Enhanced cash flow managed the financial reputation in Competitors in businesses.
2-3 Decentralized Finance
Digital Money a space where any one can get access for financial transaction. Increase business by
utilizing the trade in shape of barrow, earn interest without any support of traditional institutions. This
uniform financial position bring more secure business and stability in profits, rather than those who are
decentralized credit records.
3- Risks of Digital Money
Rather than the secured digital currencies have not been protected by cyber intimidations. Always having
threats like hacking, this type of threats can be minimize the trust on Digital money, but cybercrime
leading an important role on financial discrepancies. Most of time transaction can be made but never be
reverse, mean they once lost to fraud never be recovered. Many regions regulatory bodies are struggling
to how they can be regulate the cryptocurrencies and stablecoins. The uncertain conditions are being
caused of challenges in business transactions. Unexpected changes cases on operations cost.
3-1 Instability
Instability on cryptocurrencies and digital coins which may be less appropriate for daily transactions.
Variation in prices can be case of businesses uncertainly and financial losses, if to be adopting
cryptocurrencies as a medium of exchange. This the main object consumer can be irrelevant with digital
money, cause of dispute and high risk in transaction.
Knowledge on Technology may be the matter on smooth transaction but illiteracy on internet may cause
on challenging in business, rather than those who have internet access and knowledge may be part of
digital money. Market influence with unregulated may be vulnerable to operations. Trading can be
operate on misrepresented price case unstable market structure. Investors cannot rely on situation.
3-2 Potential misuse.
Illegal activates like money laundering taxes avoidance and illegal financial operations are being caused
by Digital Pathway. This misappropriation highly concerning for legal affairs and agencies. Concerning
for delaying business and struggle of genuine users.
4- Conclusion
In financial field digital money playing a vital role in financial transaction offering the aids to increase the
suitability, and secure infrastructure in financial field. As bitcoin, cryptocurrencies, stabilcoin, and
Central bank digital currencies, these are the medium that we have been learned who maximizing profit
covering the barriers between the globe increasing profits and business.
Where we have benefits with digital money we have also the pros and cons, but proper implementation of
rules and regulation to securing the financial transactions. Moreover, if inclusive policies and
powerful infrastructure building really aren’t implemented, the digital divide may end up making
already-existing disparities worse.
Governments, financial firms, and customers must collaborate to develop a regulatory
framework that promotes innovation while safeguarding against possible risks as we enter this
new wave of digital finance. We can create an efficient and inclusive economic future that
benefits all by seizing the opportunities that digital money offers and tackling its obstacles headon.
To sum up, the path to a completely digital economy is only getting started. Digital currency has
the power to change our environment by becoming more resilient, accessible