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.
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.
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.