Most of us have our monies in coins and paper, and a growing number of people
are starting to see the value of digital banking. But, are we ready for the new forms of digital
Digital currency consists of electronic units of value that can be money in an online form, or a money-like creation that can use and retain value in various situations. These online units can make transactions faster and easier between people and businesses, and a financial system like this can help to build the worldwide economy as people become more connected through technology.
The Three Types
First, there is cryptocurrency. This value unit is created using cryptography, where it is protected and must be verified in a particular network. These types can include Bitcoin, Litecoin, Ethereum, Zcash and Stellar Lumen. An example of using cryptocurrency would be making a purchase from Amazon.com using a third party service known as ‘Purse’ to process your Bitcoin payment.
Secondly, there is virtual currency. This is typically made by game developers for in-game purchases, and the value of the currency can be extended beyond simply buying things. Virtual units can give your game character speed abilities, or bring them back to life if needed.
Thirdly, digital currency is the typically online format of a country’s monetary system. Online banking and investing, as well as online bill payments, would fall within this category. In other words, it is the digital version of the money we physically hold in our hands.
The Pros and Cons
On one hand, transactions become faster and easier to process, especially since these systems would normally work on a mutual network that mostly removes the need for a third party to help make the transaction happen. This leads to cheaper costs and prices, and more savings if one is careful with what they earn.
On the other hand, being digital means that these units are prone to being hacked, which leads to the need for secure online wallets that can withstand cyberattacks. The value of these units can fluctuate rapidly as well, since their standing on the global market would be affected by the economic situation of any particular day. Also, one would need to have internet access and the appropriate computers or phones needed to access their currency database.
Using Budget Leaf
In certain countries, it has been found that some people do not necessarily use bank cards to handle transactions. Spending takes place more often and with less consideration when someone is able to swipe and purchase, while holding money physically can cause you to really put thought into how your spending is going. With Budget Leaf, you can write down your savings, goals, expenditures, and even take a note of your digital currency when you do have some. This will help you to maintain the discipline needed to grow your physical and digital portfolios.
As the world moves towards an online way of living, how we save and spend money will also adapt to these standards. Having digital currency of any kind can translate to real-life market value, but one has to be careful of the units they keep and ensure that their property is protected from attacks, theft and irregular price fluctuation. With more research, and a conversation with your financial advisor, you can build a digital currency database that is just as robust as your local bank account and enjoy the benefits of both.