Unless you don’t live on planet earth, you must have heard of digital currency and how they are changing the world of finance. Digital currency refers to any digital or electronic money that is stored or managed on the internet.
The world is going digital and so is legal tender. Over the years, different types of digital currencies have sprouted. They include cryptocurrency, virtual currency, and central bank digital currency. However, cryptocurrency is the most common digital currency.
Digital currencies can only be accessed via mobile devices and computers since they are in electronic form. In the finance sector, digital currencies have been able to overcome some challenges present with traditional currency. This made digital currency to be widely accepted across the globe. In this article, we will be reviewing the advantages/pros of digital currency in our present society.
Advantages of digital currency over traditional currency
Although digital currencies have some similarities with the traditional currency they do not operate the same way. However, they can both be used for transactions. Below are some of the advantages digital currency has over traditional currency.
1. Fraud proof
Digital currencies especially cryptocurrencies are built-in ways that it is difficult to hack into the system or commit fraudulent activity. With cryptocurrency, every transaction carried out is published on a public ledger, and copies are distributed to everyone involved. Cryptocurrency uses blockchain technology which connects different blocks and makes it difficult to alter one block without altering the rest.
The details of its users are encrypted and it operates via a decentralized system ie it is not controlled by a single administrator, bank, or the government.
Exchanges made between digital wallets are guaranteed by the ledger to be at par. Every exchange is checked to make sure that the coin used is claimed by the present high roller. This public record is referred to as a transaction blockchain.
3. Faster receipts of funds
With digital currencies, payments are faster even more than wireless transfers. Digital currencies are more efficient for payments, especially in the international market. Unlike traditional banks that sometimes take days to confirm payment, digital currency transactions are completed within minutes.
4. Lower transaction rates
Transferring funds from one country to another comes with a lot of hurdles. The rates are often very high, banking policies are different and there is the possibility of making errors. Digital currencies are changing this trend by making transactions between countries faster, less expensive, and safer.
With the internet at our fingertips, digital currencies are easily accessible at any time of the day. You can make transactions on your mobile device or computer from your wallet without having to go to the bank or any financial institution. The function at the same speed 24/7.
6. Zero Inflation
Digital currencies are not affected by inflation in a country. This is quite common in underdeveloped countries where the central banks inflate their currency to stay ahead. The rise and fall of this traditional currency do not affect the rate of digital currency especially cryptocurrency. Little wonder most people in underdeveloped countries convert their money to digital currencies to prevent it from losing its market value.
Digital currencies are changing the world and they have come to stay. If you haven’t started making use of them, now is the time to jump on that train.