Digital Cash, Digital currency, Internet money, Fraud – What is it?
Perhaps you have already heard of cryptocurrency or digital currency and have seen the hype around it on a daily basis on the news. But do you have any idea what it actually is and how it works? There are many articles on the internet that are informative and very educational so we will try to put it in a different, simpler way.
A Digital currency is digital money (no, really?!) or digital cash, whatever you like to call it. It is not official money and it is not backed by any government. At least not yet. Actually, digital currency allows you to send money to anyone without a central bank or government.
Today, there is a global battle among cryptocurrencies regarding which one will hit the stock market first – because none of them are on any official stock market for trading. Technically, cryptocurrencies are restricted entries in computer databases and unlike known currencies, they are not secured by people but by machines! It is not centralized or authorized like the money we use today because they are generated by the digital network. The decentralized control of each cryptocurrency works through a blockchain (oh, another fancy word, right), which is a public transaction database, functioning as a distributed ledger. The primary function of a blockchain is, therefore, to certify transactions between people.
The idea behind Digital Currency is simple: to have a fast, safe, direct, anonymous and globally accessible currency that has a controlled supply and is limited (by the network). Will we have this near-ideal currency at the end or will this idea be influenced by governments and politics? The near future will tell.