With the advancement of technology, payment methods are also advancing in the form of digital currency. Digital currency is a kind of currency only available in digital or virtual form with properties similar to physical currency. Digital currency is a popular online payment method and is different from classical payment modes such as cheque, credit or debit, bank transfer or cash, etc.
The record of digital transactions is kept by blockchain. It is a type of database that keeps the information records so that it cannot be hacked or changed. With the help of a blockchain system, digital information can be recorded and distributed, but not edited. Blockchain is regarded as a digital file of the transaction, distributed over the entire network of the computer system.
digital currency safe and legal?
Most of the cryptocurrencies are based on blockchain technology with decentralized networks. Digital currency like bitcoin stores its blockchain over a collection of computers. This method of keeping records in the form of blocks on the blockchain is somewhat complex and technical therefore a hard nut to crack by hackers. Moreover, the digital ledger of cryptocurrency transactions require an authentication process based on two factors thereby giving a boost to security. Despite all the security, it does not mean that the digital currency is unhackable.
The legal status of digital currency also matters. It is legal in the U.K, Japan, the USA, and other developed countries while its legality is still a question in various developing and developed countries like Pakistan and China respectively. According to, Satoshi Nakamoto a Bitcoin’s pseudonymous creator, digital currency is “a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”
In recent years digital currency is gaining popularity due to its advanced technology. The transaction cost is lowered and is approved by a blockchain of thousands of computer networks. Also, the digital currency provides the facility to make payments at any time and blockchain eliminates the involvement of a third party in the verification process. Digital currency like cryptocurrency can be sent from one account to another seamlessly and is impossible to track.
Despite its benefits, digital currency and blockchain are offering few disadvantages also, the illegal activities and trading like money laundering has been possible by means of the blockchain network. Moreover, the decentralization of the network has given a boost to criminal activities.
Digital currency provides the opportunity to gain advantages but it has the potential to disrupt the financial system. Although the disadvantages of digital currency with blockchain network are less but still there is a need for government regulation. There occur dramatic swings in prices and most probable ups and downs with every passing moment. So be prepared for the challenges if you are going to invest digitally. According to IMF Chief Economist, the U.S. dollar's pivotal role in global trade can’t be challenged by digital currencies.