An Introduction to Digital Currencies - Not all Digital Currencies are Crypto!

In simple terms, everything is digitized nowadays such as payments, education, banking, hospitals and shopping. Digital currencies usage and their features have led companies to come up with different types of it.

In this blog, let us see the types of digital currencies, the benefits they render and finally touch upon cryptocurrencies.

Digital currency and its types

Any currency that can be accessed digitally can be termed as a digital currency. Virtual currencies, cryptocurrencies, and e-cash are some of the examples of digital currencies. 

Digital currencies have major applications in the finance industry making secured transactions by eliminating the risks of phishing attacks and stealing. 

Now, let us see the types of digital currencies!

Two popular types of  digital currencies are discussed below

• Virtual currencies

• Cryptocurrencies 

Virtual currencies or Virtual money - These digital currencies are used inside a particular system or network. 

Example: A particular coin available for a gaming platform. One can use that coin inside the platform to buy or sell virtual stuff, but cannot use the same coin to buy food or other tangible items outside the platform. 

Cryptocurrencies - These digital currencies can be used for global payments, transactions, and trading. They adopt a decentralized system backed by blockchain with no central authority.

Example: Bitcoin, Litecoin, and Ethereum.

Reasons why digital currencies are opted

• Digital currencies facilitate easy cross-border transactions through an exchange with low transaction costs and time.

• It also allows for fast and easy fiat currencies conversion at any time and from anywhere, as it eliminates the additional time and cost usually spent on making international payments through banks.

• Every transaction is recorded and stored virtually, thus making it more secure and fraud-free. 

• Many payment gateways have integrated digital currencies systems to provide better service and experience to their users or customers. 

Now, we will see the crypto success story!

How did cryptocurrencies gain prominence? 

• Cryptocurrencies are unique and each has its own properties and serves different purposes. 

• It's easily-accessible nature serves as the main reason for its successful outbreak and every transaction made by cryptos is stored in a ledger. 

• As it's decentralized, no one has control over it except the user who owns the crypto in their digital wallet. 

• It provides instant settlement options as it can be carried out easily with a stable internet connection and a smart device. 

To sum up!

Summing up everything, we can say that digitization has gone so far. No field can be imagined without technology now. Digital currencies prove to be the best option in place of physical currencies.

Many researchers and industrial experts believe that cryptos are going to be the future mode for financial transactions. 

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