The world has moved to the digital space, so has banking. The practice of carrying around hefty amounts of cash is history now, thanks to Digital Money.
An overview of Digital Money
Digital Money is any money that is exchanged by the use of technology such as mobile phones and computers. Credit cards, debit cards, and online cryptocurrencies are examples of digital money. In some cases, digital money can also be transferred into physical cash, withdrawing cash from an ATM is a classic example of the same.
The concept of digital money evolved in the early 1990s when the internet started becoming popular. Several digital cash companies were formed as early as 1990, the most famous among them being DigiCash. However, most of these initiatives failed due to inappropriate integration with the internet.
Digital money has come a long way since. Today, people think twice before using cash but hardly hesitate to use digital money. From purchasing retail products to making payments to someone located across the globe, anything is possible using digital money.
Importance of digital money
Literally speaking, digital money is basically a certain number on a screen. It can be transferred instantly and does not need currency to be physically moved from one place to another. It has reduced the time of transactions, especially when the payer and the payee are located thousands of miles away. There can be a fee associated with storing and transferring digital money, however, the same is justified considering the convenience factor involved with it.
Digital money is stored as data and hence is harder to lose. Although data is vulnerable to attack by hackers, financial institutions across the world undertake measures to protect these data.
Most importantly, digital money has opened up a plethora of opportunities worldwide. It can be used for purchasing products available anywhere in the world. As more and more organizations embrace digitization, the usage of digital money is becoming a matter of habit worldwide.
To sum up, digital money has three basic benefits:
- Convenience: They have negated the requirement to carry cash around. Payments can be made anytime to anybody located anywhere. People don’t even have to be present physically to pay or receive money.
- Easily traceable: All data is stored in digital form makes it easier to access. Every little transaction is recorded and hence easily traceable. This removes any kind of ambiguity regarding the tracking of transactions.
- Reduced risk: Since data is more difficult to tamper with than stealing hard cash, digital money has brought a sense of security to the entire financial system.