Digital Currency or Digital Money is distinct from physical i.e banknotes or coins. It allows instantaneous transactions and there is no border for transfer of ownership.
Just like traditional money these currencies can be used to buy goods and services but it also has its restrictions w.r.t certain industries for example online gaming or any social network etc.
What is Bitcoin?
It is a currency which was created by an unknown person using an alias Satoshi Nakamoto in the year 2009. With this currency transactions can be made without the need of the middle men therefore there are no transaction fees involved.
A virtual wallet website like block chain can be set up to store, track and spend your Bitcoin. You can easily purchase Bitcoin from an online exchange or a bitcoin ATM.
It can have fast peer-to-peer transactions, worldwide payments can be done easily and it has low processing fees.
How does Bitcoin work?
Bitcoin wallet gets included in the Block chain. It keeps a secret data called a private key or seed, used to sign transactions which provide a proof that the transaction is from the owner.
All the transactions are broadcast between users and are confirmed by the people in the network by a process called mining.
Mining involves solving a complex mathematical problem with a 64 digit solution. For each solution one block of bitcoins is processed.
Future of digital currency
Digital currency is the future. Banking will be changed forever by the development of blockchain technology. It’s much easier for computers to do the work that bankers do, not to mention there’s less chance for corruption and fraud. I just don’t see how banks can continue to charge for services that are free on blockchain networks. I can earn returns on my fiat currency by placing it safely into cryptocurrency, with no need for a bank to “service” it for me. Just look at all the people who would rather use E-Trade, Ameritrade, or any of the other online stock trading software. Banks will still be there for servicing fiat currency, it’s just there’s no need for them to hold or store your account information anymore and leave it vulnerable for massive hacking incidents like has happened already in the past. Let’s not forget the banks reputation with the public either after there last “bubble”.