What is digital currency?

Digital currency is any currency that has no physical representation in the real world. The benefits of this are great, yet it also limits transactions to those with devices capable of connecting to the internet.

For Cryptocurrency, this is a fundamental trait of the currencies. The advantages of this are numerous in an increasingly digital world.

Minimisation of physical infrastructure

Because digital currency doesn’t require a real-world counterpart, it means that you reduce the costs associated with maintaining it. Lost money, the need for mints to print more money, physical banks, all of these requirements disappear, creating efficiencies across the board.

Ease of remediation

When transferring currency from location to location numerous safeguards are required in order to keep the currency safe. Not only that, but transference of wealth internationally requires multiple third-party systems in order to remediate the funds from one place to another. Digital currencies such as Ethereum and Bitcoin have this built into them.

Currency lifespan

Your average piece of physical currency has a lifespan due to wear and tear. Digital currencies don’t suffer from this loss of currency. For cryptocurrency, each unit of currency is accounted for on multiple nodes. So even if one node goes down, another will take its place.

Digital currency clearly has many benefits over physical currency, it will still be awhile before physical currency can be phased out altogether. Though it is obvious in an increasingly digital age that this will happen eventually.

Mr M