With the expansion and integration of the internet as a necessary tool in daily life, the use of digital currency is on the rise. What is digital currency, you say? Well, it is obviously a type of currency that can be used for transactions, as the name suggests, but it has no physical form, unlike paper money. This kind of currency includes cryptocurrency and virtual money.
You can use this digital money to perform traditional transactions, but the means of payment differs — this currency allows for instant transaction without adhering to borders. There are both advantages and disadvantages of this type of currency, which we shall examine in detail.
Pros of Digital Currency
- Values Anonymity:
Digital currency like Bitcoin allows users to remain anonymous which further strengthens the security around buyers. While transactions are made public to encourage use of the cryptocurrency, intense privacy is accorded to the individual or groups that purchase bitcoins. A buyer does not have to worry about their identity being revealed or stolen because of nearly impossible security taken to guard their identity.
- Easy Payments:
Virtual currency is a very easy currency to use. Payments can be made using digital money all over the world. This is especially important because even if you do not have access to a banking system, you can use digital currency to make purchases. It is the most accessible financial system as of yet.
- Ease in Using Digital Currency:
Users can receive or send digital currency to other users. They can send virtual mo to any part of the world. Another advantage to this is that no prior approval is needed from any financially concerned body, say banks, or the Treasury, to use digital currency.
- Protection from Fraud:
When you use credit cards to pay for your purchases, you run the risk of revealing your personal details. Every time you use a card, your personal information is out in the open, and if it falls into the wrong hands, you will be a victim of fraud and fraudulent activities. However, digital currency does not require any sort of personal information for transactions, thus you are protected from fraud.
- Purchasing Digital Currency at Your Own Leisure:
Like many online transaction stores, you can buy digital currency from anywhere around the globe. You can even purchase digital money from your own smartphone. You should have a stable internet connection to purchase virtual currency. Personal information is not required to make any purchases, unlike banks that demand personal information to make transactions through online portals.
- Gradual Acceptence of Digital Currency as a Means of Purchase:
Digital currency, for all its flaws, is slowly being accepted into mainstream financial processes as a means of currency. This makes matters easier for those who are uncomfortable with leaving a paper trail, or those that want an easily liquidated cryptocurrency.
- You Get to Track Your Transactions at All Times:
If you use a cheque or wire transfer to pay for your purchase, it takes up to three business days to see the money being reflected on your account. Even then, if there are issues at the bank, or there are holidays or special events, it could take even longer for your payment to show up. With digital currency, you can track your transactions at all times, 24/7.
- Digital Currency is Accessible to Everyone:
Digital currency can be accessed by anyone around the globe. What this essentially refers to is the fact that people can start “farming” digital currency whenever they want to. Banks and money lending organizations require an evaluation test that you to pass their evaluation to be able to earn money. However, with digital currency, you will not face such obstacles. Your farmed momey remains yours. All you need is a smartphone or laptop, and a stable net connection.
- Very Low Fees:
Compared to other payment facilities, digital currency requires very little transaction fees. This makes a difference when you are using digital currency to pay for purchases because the standard fee of digital currency is between 0 and 1, which is radically lower when compared to fees of cards.
Cons of Digital Currency
- Accessibility is a Problem:
While anyone can access digital currency to use it, it is double edged sword — this accessibility gives permission to people with nefarious intents. Your money can be accessed and stolen by hackers. In fact, there are those who believe that digital currency is actually a fron for laundering money and conducting various illegal activities.
- The Volatile Nature of Digital Currency:
It is very easy to get rich quickly by investing in digital currency — in 2017, the value of the Bitcoin jumped 25 times, and the value increased from $750 to almost $19,000. However, it is just as easy for the value to fall all of a sudden. You could be sitting on a pile of money one day, but barely have enough to pay rent the next. The volatility of the market makes it very unsafe to invest in digital currency.
- Easy for Hackers to Target You:
You may not leave a trail like paper or electric money, but digital currency does not have as strong a barrier to keep away hackers. Your money is actually practically waiting to be taken away by someone who knows exactly how to manipulate the system. Digital currency is not very safe.
- Decentralized Currency:
Digital currency is a decentralized currency, meaning, its value cannot be determined by the government of any country. Therefore, the value of the currency cannot be predicted, which leads to heavy fluctuations. Some countries like China, Russia, Vietnam, Bolivia, Ecuador and Columbia do not recognize digital currency as a valid mode of currency.
In conclusion, digital currency has many advantages to it, and paying lower fees, accessibility and anonymity are some of them. You can get rich pretty quickly by investing in digital currency, but there are still many problems to solve.
The innumerable security issues and the volatility of the market can be a real downer for many who are looking to invest in digital currency.
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