The internet, world wide web, computers and smartphones are changing commerce all over the world. In Nigeria, there was an introduction of a cashless economy. This is facilitated by what we referred to as digital money or currency. In this article, let us consider it.
Definition — What is Digital Money?
It is a modern concept in which money can be transferred or wired through electronic medium. Digital money is a new way of sending and receiving money via wire transfer between two persons using debit or credit cards and other electronic means.
Key Explanations of Digital Money
Modern concept. Digital money is an upshot of fiat money. Most of it follows the same logic as paper money. Cash is usually of various denominations: N10, N20, M50, N100, N200, N500, and N1,000. Also, a transaction may be to pay N500,000 to a client. Online currency has made it easy to move huge amounts of cash from one place to another without fear of thieves.
Wired Transfer. This is the use of optic cables to move digital currency from one location to another. The internet, world wide web and mobile apps have been created and used to move cash to any part of the world. With these, currency of one country can easily be converted to that of another without going to an Exchange market.
Electronic medium. Various mediums have aided the transfer of currency. Electronic stripe cards, popularly known as debit and credit cards are used to wire cash between people. Automated Teller Machines are installed in bank branches where bank customers can insert debit cards. They can either withdraw cash, transfer money or buy airtime through this medium. Debit cards can also be used with a computer or mobile phones. At the comfort of their home or offices people have wire cash to family and friends. And have to buy goods or pay for services.
Electronic stripe cards are not the only medium that facilitate digital money. Barcodes, internet banking, financial technology companies (Fintech), point of sale (POS) machines have helped make online cash possible. All of this uses a centralized system which can be monitored by the Central Bank of the country. Leading to issues like account closure without the knowledge of the owner of the account.
Another Digital Currency
Although, a centralized system is used. There is a decentralized system. This is known as blockchain ledger technology. Which can not be traced or blocked by any person. In addition, it is difficult to hack. This gives the owner autonomy over his or her account. Cryptocurrency is now the other of the day. Bitcoin, Ethereum, Litecoin and other alternative coins and stable coins relied on decentralized ledger technology. Today, Bitcoin is widely known and is competing with major commodity money (that is, Gold).
Digital money is currency that can be transferred from one place to another using an electronic medium. The Central Bank regulates centralized technology of digital money. This makes it easier for them to block accounts of individuals. However, Cryptocurrency, a type of digital currency has made this difficult. And has thereby helped many poor people to become wealthy.