Last updated on December 9th, 2024 at 10:29 am
There’s no other alternatives to faster and more secure cross-boarder transactions like digital currency, no wonder its rapidly changing the financial system through the growth of Bitcoin, Ethereum and lots of other cryptocurrencies.
What Is Digital Currency?
Digital currencies are currencies that are used electronically for buying and selling of products and services. It’s also called digital money or electronic money and doesn’t have any physical form or shape to be handled, stored, or manipulated.
Since digital currency doesn’t have physical attributes, transactions of digital currency are made through digital wallets connected to the internet. They share some similarities with physical currencies, such that they can be used for the purchase of goods and services.
The advent of digital currency has improved the speed of cross-boarder transactions. For example, someone from another continent can make a product or service for another person from a different continent provided they’re connected to the same network.
Characteristics of Digital Currency
Decentralization
Many digital currencies are decentralized, meaning they rely less on central authorities like banks.
Global Accessibility
Users can send and receive digital currencies across borders with internet access, enabling effortless international transactions.
Security Through Cryptography
Cryptographic methods safeguard transactions and prevent counterfeiting.
Transparency
Public ledgers allow transactions to be visible and verifiable, enhancing accountability.
Volatility in Value
Prices can fluctuate significantly due to market dynamics, making them both an opportunity and a risk for investors.
Types of Digital Currency
Digital Currency is a broad industry, with most people knowing only about currencies, and there’s a need to discuss the different types of digital currency
Crypto Currency
Cryptocurrencies are the most popular type of digital currency that uses cryptography for security and transparency of transactions. Cryptography can also be used to manage and control digital currency.
Virtual Currencies
Virtual Currencies are unregulated centralized currencies that involve different stakeholders during the development of assets. Virtual currencies are controlled algorithmically by network protocols. A gaming network token defined and controlled by developers is a typical example of a virtual currency.
Central Bank Digital Currencies
Central Bank Digital Currencies are currencies regulated and issued by a central institution of a country and they can be a supplement or replacement for fiat currencies. Countries such as England, Sweden, and Uruguay are planning to launch digital currencies.
CBDC can improve the efficiency and security of the centralized system through lower cost and stress of handling cash while promoting financial inclusion for businesses without access to traditional banking systems and also making cross-border payment seamless.
Top Digital Currencies
Here we’re going to be considering some top digital currency that can be used for buying and selling.
1. Bitcoin
This is a pioneering digital currency and was founded and developed in 2009 by an organization called Satoshi Nakamoto. Although the biography of the founder of Bitcoin is a bit sketchy. Bitcoin can be said to be a decentralized digital currency created to revolutionize the transparency and security of trading.
Bitcoin can be used for payment of products and services over the internet. Bitcoin technology is made of software and protocols to govern the Bitcoin network and blockchain technology. It’s the most valuable digital assets with a price of over $57,460 and pioneers the creation of numerous crypto assets. Furthermore, the blockchain technology, which is the brain behind Bitcoin, has caused an overall improvement in the financial system.
2. Ethereum
Ethereum is a digital currency that was founded by a Canadian developer in 2013. Ethereum’s major success came the next year after an estimated crowdfunding of 30,000 Bitcoins with a strong desire from the founder to disrupt the financial system through the internet. Ethereum as a global innovation helps programmers write smart contracts and also facilitates the creation of multiple decentralized applications (DApp).
Ethereum has its token called Ether and its price at $3,123 with a 24-hour-a-day trading volume of $15 Billion. Ethereum uses Blockchain technology for payment and also to maintain record of transactions. The Ethereum Blockchain technology offers users verification of transactions to their wallet through peer-to-peer networks and smart contract innovation for reliable and transparent transactions. Furthermore, Ethereum Blockchain technology provides security for transactions and participation in ICO through the ERC20 standard of the Ethereum network.
3. Litecoin
Litecoin is a decentralized open-sourced digital currency that has an hash algorithm, maximum supply, and transaction processing time for more access to the crypto world. Litecoin was launched in 2011 by Charles Lee for fast, secure, and lower-cost of transactions. Litecoin has won the admiration of many investors through its lightning-fast transaction.
Litecoin was created for peer-to-peer payment and cross-border transactions. Litecoin generates block time that’s four times faster than Bitcoin to ensure faster transactions and increased network capacity. Furthermore, Litecoin offers four times more than Bitcoin’s maximum supply for accessibility.
4. Ripple
Ripple is an open-source digital currency that has a native token called XRP Ledger for enhanced cross-border transactions. XRP serves as a settlement layer to facilitate transactions in the Ripple Net and Ripple commercial platforms. It can be traded on numerous exchanges, such as futures, swap exchanges, spot exchanges, custodial exchanges, and non-custodial exchanges.
How To Buy Cryptocurrency
Choose a Platform: Select a reputable cryptocurrency exchange or broker based on security, fees, and supported currencies.
Create an Account: Register on the platform, complete identity verification, and set up two-factor authentication for added security.
Deposit Funds: Add money to your account using bank transfer, debit card, or other accepted payment methods.
Select a Cryptocurrency: Research and decide which cryptocurrency to buy, then place an order for the desired amount.
Store Your Cryptocurrency: Transfer your purchased cryptocurrency to a secure wallet, either software-based or hardware, for safekeeping.
Final Words
Cryptocurrency can be a very profitable venture for any investor, but it’s advisable to seek the guidance of a financial advisor to learn about cryptocurrency exchanges and how to use them to make profits.
FAQ
Is Cryptocurrency Safe?
Cryptocurrency is built on the blockchain technology for transparency and security of transactions from unauthorized hackers or theft.
What is the difference between money and digital currency?
There are lots of demand by physical currency such as central authorities and establishment of physical manufacturing facilities. Whereas, in digital currencies, there are no expenses involved and digital currencies are immune to soiling or any physical defects present in physical currency.
