Posted in Finance, Accounting and Economics Terms, Total Reads: 99
Definition: Digital Money
Digital Money is the online (internet) form of physical currency. It is a cryptocurrency i.e. it is encrypted to prevent duplication but the base of this currency is always fiat money as in you can convert the money into physical form or shop via digital currency as normal currency whereby the services are allowed.
Now-a-days to get a hassle free service, people prefer digital currency only. And the technology has enabled people to get it. Although digital currency provides various benefits to the users, it has its own set of problems like fear of theft via hacking and illegal activities online. Fiat money is still believed to be comparably safer. The underlining characteristics and behaviour of both fiat and digital currency is the same such as transfer, buying and selling.
There are many regulations in place for digital money from various central banks, governments, MOFs to keep safety measures in place to protect the interests of the consumers. The development of digital wallets and online and mobile payment systems has enabled the widespread use of digital money. Businesses have leveraged on the use of digital money as it saves them time and transactional costs. The difference between the digital money and the electronic money is that electronic money essentially needs a card such as visa or debit card onto which the electronic money is loaded, while digital money is completely online without requiring any card.
For Example: Paytm is a company which has online services for digital wallet. In the digital wallet of Paytm, one can store the money and pay for the services or goods as in when needed and allowed.