What is Digital Currency?
- Written by News Co
Currency
Noun
A system of money in general use in a particular country.
"the dollar was a strong currency"
The fact or quality of being generally accepted or in use.
"the term gained wider currency after the turn of the century"
Definition: Oxford Languages, 2021.
Currency is a language that allows us to express transactional value between people.
Even as kids, we invent currency, like little sweets, cookies, or Pokémon cards we exchange with friends. Currency is a technology that we use all the time. It started in its infancy as a method of bartering for goods and services and commodity money. (Historic examples of commodity money include alcohol, cocoa beans, copper, gold, silver, salt, seashells, tea, and tobacco.)
Now that we live in the digital age, it’s only natural that there will be one or many currencies native to the internet, i.e: digital currencies. It’s logical and inevitable.
The United States is an outlier in regards to digital currency.
The concept of freedom-of-money is one of the most exciting elements of digital currency technology. From an Australian perspective, It’s sometimes difficult to explain, because we have stable currencies and we don’t think that this can affect us.
Take for example, Pornhub. Pornhub is one of the largest websites in the world… that now can’t take credit cards as a form as payment. Why? Read more here. And back in 2011, there was the WikiLeaks fiasco with Julian Assange. He was banned from receiving credit card payments - meaning he couldn’t take donations or payments via what was back then, the most commonly accepted form of digital payment. So what did he do? He started using Bitcoin.
While the rest of the world looks to welcome new FinTech advances such as Bitcoin, Etherium and Qoin, the United States seems to be behind the eight-ball, appearing to be less willing to embrace this emerging technology, looking instead to enforce overzealous restrictions or ban digital currencies altogether.
While there may be discord within global governments regarding the future of digital currency - the reality is that the train has already left the station. Digital currency is alive and thriving - it’s the governments and banks that are trailing behind.
Even if the U.S. could stop it, there are 40,000 mining nodes outside of the U.S, so their displeasure or outright rejection of digital currencies is really irrelevant.
What is a mining node?
A mining node is a node that contributes to the currency network by guessing the combinations needed to ‘seal’ the blocks of transactions and thus in confirming them, produces new currency in the process. So.. governments are very limited in how they can stop the growth of digital currency. So long as a node is running somewhere in the world , digital currencies can continue to validate transactions.
Why cash?
We’re now starting to question the big corporations and establishments of our time. Are Google and Facebook really the only answer? Are there alternatives to the big banks and the way we do our banking? There’s a movement for the decentralisation of finance - to expand our world with innovative and modern solutions to the way we live and do business.
Many industries are in the semi-legal zone in America. For example, if you are a gold dealer or part of the weapons manufacturing industry (both of which are legal) - you’ll still run into significant problems with banking. Banks have the ability to freeze or access the very assets you hold with them - and - without your permission. What’s yours, is not really yours. In America, some banks even stopped transactions or terminate customer relationships with people who send money to their Coinbase account. FYI - Coinbase is the largest digital currency exchange in the world.
COVID-19’s effect on the tech sphere and financial sector
The COVID-19 pandemic has helped expedite the adoption of digital currencies and break down sector barriers. This progress has accelerated the tech growth of digital currencies by four years. E-commerce adoption in 2020 reached an all time high, despite predictions of significant decline.
Incredibly, from a historic point - 21% of all U.S. dollars in the world were created in 2020. When such staggering amounts are being printed, people question the stability of the sector and the legislation and regulation supporting it. This then leads to more questions around the validity of traditional banking and monetary systems.
Old technology vs new technology
Credit cards handle nearly $20 trillion of transactions per year. While the cards might seem shiny and new, the system is really an outdated technology where payment details are shared with many intermediaries. Each of these parties also takes a cut of the action, which is built into the price of nearly everything a consumer buys. If a customer purchases something internationally, it may double the number of intermediaries and triple the fees.
The Internet is now adopting digital currencies like Bitcoin, Etherium and Qoin across payment options. The world’s largest economy is adopting digital currency, transcending borders.
Naturally, the internet will be sure to have its own internet-native currency or more likely, many currencies. It’s only a matter of time until the big online merchants will have their own digital currencies or token systems. Imagine Amazon trying to run their internal accounting with a hundred different national currencies and balancing the books.
Digital cash or digital gold?
The original Bitcoin white paper was called a digital peer-to-peer electronic cash system. It was meant to be money for the internet, but it hasn’t panned out. Bitcoin has instead become more of a digital asset, a digital ‘gold rush’. Thousands of people were brought into the ecosystem early and told, “No, no, no. This gold thing is wrong. You shouldn’t be keeping it. You should be spending it.”
There is a clear philosophical difference in regards to digital currencies. Ultimately the market will decide which currency is valuable or not. It's positive that different projects are being innovative in their offerings and point of difference - companies like Qoin are a clear example of that, capturing the merchant adoptions and increasing the number of transactions.
