Digital currency is also called cryptocurrency, virtual currency, electronic currencies, or even electronic money.
These assets are money and a type of currency, but they do not exist in physical forms. But instead, they are electronic and exist in the electronic world of Internet space.
Electronic currencies goals
These currencies appeared, and their number is increasing day by day, with more of them being launched with different names, and Bitcoin is the most famous, but not the only one.
All these currencies were found for a clear purpose, to use them in electronic payment on the Internet and commercial transactions and to transfer money quickly from any country to another without limits.
With these currencies, the process of transferring billions of dollars has become very easy. It takes place in minutes with high privacy. This is not possible in reality, as central banks usually set limits for the financial liquidity that will exit the country.
Electronic currencies came not only to transfer money quickly without recognizing geography, time differences, national currencies, the structure of the economy, and sovereign borders but also came to be used to buy goods and products, sell and receive revenues and profits in forms of electronic currencies that can be exchanged into dollars and monetary currencies.
Also, these currencies have exchanges for trading, which are electronic trading platforms distributed around the world, which allow those looking for profitable investments to buy and sell quantities of them when their value rises and the difference between the purchase and sale price is profit, and of course, the loss is possible when selling during crises and selling times
How do electronic currencies work?
Electronic currencies, specifically Bitcoin, are decentralized currencies, meaning that no government or institution can control the production of more of them.
But how are currencies controlled?
Digital currencies are controlled by a technology called the blockchain.
Blockchain was defined in the book (The Blockchain Revolution) by writer Don Tapscott and his brother as an electronic book of accounts that cannot be tampered with for economic transactions that can be programmed to record financial transactions but to everything that has value.
It means that every economic or financial transaction that occurs on the system is recorded and encoded in a blockchain and linked to other blocks to form the blockchain.
The electronic currencies system or the Bitcoin system, which is a decentralized system for sending and receiving money, is characterized by several things:
– The high speed, in which the money you want is transferred in less than seconds, unlike the traditional banking method that takes days.
– The low cost, as the cost of transferring money in Bitcoin, is almost free or negligible.
Protection and transparency, as every economic or financial process is saved in a blockchain and distributed to millions of computers worldwide, makes its penetration practically impossible. The financial process takes place in front of the whole world, making attempts to manipulate it impossible.
The most important electronic currencies
In 2009 the first electronic cryptocurrency appeared at the hands of Satoshi Nakamoto, and this currency is called “Bitcoin.”
Bitcoin is the most famous currency in the world of electronic currencies, which all investors are advised to trade in against other currencies, and it is the highest in terms of market value.
In 2011, Charlie Lee, a former engineer at Google, invented a currency called LTC, which appeared as an alternative to Bitcoin. Still, it could not move Bitcoin from its place, and there is no other currency that could do this, although it is very close to Bitcoin.
In 2013, one of the most famous electroniccurrencies appeared, Ripple, which ranks third in electroniccurrencies in terms of liquidity. Ripple differs from Bitcoin, as the second wants to replace the traditional banking system.
To understand Ripple, David Schwartz, chief analyst for Ripple, explained this:
“Payment systems today are what email was like in the early 1980s. Each provider has built their system for their clients because they will easily interact with each other if people use different systems. Therefore, the Ripple coin network is designed to link the different payment systems together.”
In December 2014, Evan Duffield produced the Dash coin. This electroniccurrency is considered a more secret version of Bitcoin.
In 2015, the Russian programmer Vitalik Buterin invented the second most popular and best cryptocurrency ever, the currency of Ethereum, Ethereum, as a virtual or digital currency and a decentralized platform at the same time! Ethereum, as a digital currency, is understood and what it is, while as a decentralized platform, it is essential and dangerous!
Risks and disadvantages
Then electroniccurrencies could harm countries’ economies in the long run.
The fluctuation in digital currencies’ prices causes concern to many and makes it closer to the speculative market than an alternative currency.
Not completely reliable at the moment.
There are billions of people worldwide who are not good at using the Internet and dealing with technology.
On the other hand, many can use electronic currencies, but they feel suspicious of it.