ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Business and Employment»
  • E-Commerce & How to Make Money Online

Everything You Need To Know About Digital Currencies

Updated on February 1, 2018
FirozPatel profile image

Firoz Patel is an experienced professional highly skilled at creating and cultivating professional, mutually beneficial relationships.

Introduction

According to a recent survey by Accenture, 90% of top major banks across Europe and North America are seriously looking at how they can explore blockchain technology for payments. The recent interest in blockchain technology in the banking sector has brought digital currencies to the forefront. Bitcoin is again gaining popularity as a virtual currency in the payment system.

Traditional Systems

In traditional financial systems, transactions between two parties are carried out with the help of an independent intermediary. Typically these third parties are banks that provide a centralized payment system to ensure secure processing of payments. All transactions are recorded by the bank and the responsibility of recording a correct, secure transaction rests with the bank.

The Rise of Digital Currency

The wikipedia defines digital currency as an internet based currency that has properties similar to physical currencies but allows for instant transactions. What’s more digital currencies are not limited to national borders - they facilitate borderless transfer of ownership. Bitcoins are one form of digital currency.

Digital currencies has been around for 20 years - their origin dates back to the 1990s. E gold and Liberty Reserve were amongst the first virtual currencies in circulation. Q coins were very popular in China, to the extent that they had a destabilizing effect on the Chinese currency. Today bitcoin is the most popularly used digital currency. Bitcoin is a decentralized cryptocurrency that functions on a peer to peer network. It uses cryptography to control its creation and distribution. It was created by Satoshi Nakamoto. There are currently over 12 million bitcoins in circulation today.

Here are some things that you should know about digital currency:

Digital, Virtual, and Cryptocurrencies:- Virtual currencies are not dependent on the traditional banking system, in fact, they were created due to trust issues with existing financial systems. The European central bank defines virtual currency as unregulated digital money that is used by members of a specific community. Digital currency, on the other hand, is used to specifically refer to the virtual currency that is created and stored electronically. If it uses cryptography during this electronic storage and transmission then it is referred to as cryptocurrency. Cryptocurrency is very difficult to counterfeit.

Regulations

Digital currencies are decentralized and regulations regarding them could differ from country to country. However, there has been concern regarding their misuse for money laundering activities as the more anonymous a currency is the more attractive it is to criminals. Bitcoins, for example, have been known to be used for transactions involving drugs and other illegal items. Bitcoins can be traded on Coinbase which is like a virtual exchange for Bitcoins. Many payment platforms support Bitcoins and allow you send and receive funds using this digital currency. Similarly, there are many places that allow you to purchase goods and services using bitcoins. You can store your coins in a bitcoin wallet.

Image Courtesy: Bitconnect
Image Courtesy: Bitconnect

The Future of Digital Currency

As bitcoins continue to grow in popularity, it is expected that security issues around bitcoins and other digital currencies will get resolved through the development of better technology and systems. Not only bitcoins but the underlying mechanism on which they function viz. Blockchain technology is garnering a lot of interest today. All major banks of the world understand the disruption being caused by decentralized virtual currencies and blockchain technology and are looking at ways and means to integrate these into their products and services.

Summary

The recent growth in eCommerce and globalization has led to a rapid increase in cross border payments and there are ample opportunities for digital currencies as they are borderless and do not depend on any central authority for their transactions.

© 2017 FirozPatel

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: "https://hubpages.com/privacy-policy#gdpr"

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)