Digital Money

Apart from the money that we keep in our pockets and can transact directly, we see another type of money today. Such money we cannot directly touch or transact directly physically but we can exchange it online and perform many necessary functions which is known as digital money. Digital money is a major innovation in financial technology. Transactions of the money we physically transact create some problems and in all these cases digital money overcomes the problems created by cash and makes payment systems faster and cheaper. Keeping such benefits in mind, these types of money have been introduced where transactions are very fast and cheap. But this introduces the attendant dilemma of technology, as digital money can be hacked and privacy compromised.

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By digital money is meant a form of money that is completely in digital form. But such money we usually cannot physically use it as cash or goods. It is online based digital money. These types of money are circulated so that they flow the financial infrastructure. Also, we know that transactions in conventional banking systems are often time-consuming and costly.

So keeping the customers in mind, this type of money system is introduced to make financial transactions cheaper and faster in any part of the world. This can make it easier for central banks to implement monetary policy. Such currencies are usually created by the central bank of a country. Also examples of these digital money types are central bank digital currencies, cryptocurrencies and stablecoins. Since software and networking are essential components of digital money, it is susceptible to hacks.

It is fast and cheap, especially for cross-border payments. Also, such money plays an important role in remittance related transactions. Given these benefits, digital money has become a priority for governments around the world. These are money issued by a country's central bank which is online based and these digital money is converted into cash through a bank account.

Because these digital moneys are very important and offer good benefits, many countries are issuing such moneys and providing benefits to the people of the country through such digital moneys. For example, since 2020, China has started the practice of paying its employees' salaries through this type of money. However, these types of money play the most important role in online cross-border transactions.