Before talking about the future of digital currency first let’s talk about what is a digital currency. The digital currency as the name suggests is a currency in digital form stored in a distributed database in blocks which can be accessed only through electronic apps using the internet by a person who has an account in it. Digital currency is virtual but has the same properties of physical currency which is in physical form like currency notes giving value to the owner owning them. Because online currency does not have any physical form transactions can be made instantly between two parties and also remove the role of a third party handling the transactions to make it secure like banks and also they do not have border barrier as that of physical currency transaction can be made from china to America without any need of currency exchange.
We still don’t know how it will tackle with the financial system we are using right now whether it will be able to replace it or not. The most well-known online currency is crypto currency
Cryptocurrency is a digital currency which uses cryptography to make it secure and useable. Crypto means different encryption algorithms which make it secure by decentralizing the blocks present in the database. It works on the principle of blockchain technology. The feature that makes it so unique is that it is not issued by government or bank making it impossible interfere or to control the flow. The most popular crytocurrency up to date is bitcoin.
Future of Digital Currency:
As the market value of digital currencies like bitcoin and ether seems to be rising. The potential of online currency seems to be huge in terms of finance. These currencies use peer to peer method which means there is no one at the top to centralize all. And also the transactions is very fast between two parties using digital currencies. Now the net worth of all cryptocurrencies has reached 390 billion and is still increasing.Net worth of most popular cryptocurrency bitcoin has reached up to 19 thousand dollars. So the future of digital currency seems to be bright.
How it going to change the world:
Digital Currency might affect the finance world real hard if it gets mainstreamed. Some of the changes will be as follows:
With online currency there will be no inflation as there is no one at the top to control the flow or release the currency.
With online Currency there will be transparency in the transaction which will help to prevent fraud and corruption as the transactions could be traced. For example Bitcoin uses sequential block of blocks to know the history of transaction.
As this technology uses peer to peer connections to make blocks of data and then chain it together with other blocks and this form a chain of blocks which then cannot be changed without changing all the blocks so there is no owner of that system or anyone can change the data present in the blocks. Each individual with account is a member of the system and has its own personal blocks of data.
AS there is no physical currency involved so the transaction between two parties is done very fast. One can send digital money to any part of the world in matter of seconds.
No Third Party:
With digital currency there will no need of third party between a customer and retailer as transactions could be performed between peers directly and securely. So third party elements like banks and other organizations which provide security for money will cease to exist.
Online currency still has many obstacles to cover before they actually appear as current currency system. The biggest obstacle will be those financial organizations which will suffer loss from the digital currency. They have to also prove to be reliable enough to gain the confidence of masses as well.
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