Who would’ve thought we’d ever reach an era where we have digital and physical currencies. Fascinating, isn’t it? 😁
Digital currency is a type of currency available in digital form, obviously. It exhibits properties similar to physical currencies, but can allow for instantaneous transactions and borderless transfer-of-ownership. Examples include virtual currencies, cryptocurrencies, and central bank digital currency. However, our focus is cryptocurrency.
Is cryptocurrency the same as digital currency?
Yes and no. Yes, because cryptocurrency is a type of digital currency. No, because there are various digital currencies.
Digital currency has been around for a long time. Bitcoin and cryptocurrencies, though, are still relatively new. So, what is the difference between digital currency and cryptocurrency?
A cryptocurrency is a digital currency that can be sent anywhere in the world without the need of a central party.
Cryptocurrency is a type of digital currency that uses cryptography to track transactions and prevent the creation of new coins by unauthorized parties. Digital currency is electronic money that only exists in the digital world and not physically. Digital currencies are present in many common transactions made today, like when using PayPal, or even online banking.
What do you mean by “electronic money”?
Any means of payment that exists purely in electronic form. Digital money is not tangible like a Rand note or a coin. It is accounted for and transferred using computers. The most successful and widely-used form of digital money is the cryptocurrency Bitcoin. Digital money is exchanged using technologies such as smartphones, credit cards, and online cryptocurrency exchanges such as ChainEX
How do digital currencies have value?
As I mentioned, our focus is the digital currency Bitcoin. So all questions pertaining to digital currencies, will be answered with Bitcoin as the reference.
If a bitcoin isn’t backed by a government and doesn’t exist in the “real world”, how is it worth anything?
For something to be considered a currency, it needs to fulfill these criteria:
For something to be considered a currency, there needs to be a limited supply of it. Otherwise it wouldn’t have value.
For example, there is a finite amount of gold in the world, which gives it a value as a currency. Similarly, only 21 million Bitcoins will ever be released, which gives Bitcoin its value. If anything, fiat currencies like the Rand have the weakest amount of scarcity, because central banks can simply print more money when they see fit.
Cryptocurrencies are arguably the most durable currency of all. As long as the network they exist on survives, they’ll retain 100% of their value.
Since cryptocurrencies are stored on decentralised networks, they are impossible to destroy and their durability is guaranteed.
The purpose of a currency is to enable trade between people and the transfer of wealth from one entity to another.
For something to be considered a currency, you need to be able to easily transfer units of it to another person. Cryptocurrencies definitely tick this box, as they can be transferred from one individual to another regardless of geographic location (not to mention with relatively low transaction fees compared to fiat currencies).
How can I get a hold of digital currencies?
Easy, by trading them through ChainEX
You’ve never heard of ChainEX? 😕 How have you not heard of ChainEX? Even Google knows ChainEx.
So you’ve read about digital currencies, and now want to get involved? Great!
Bitcoin can be traded through digital asset exchanges.
ChainEX is a South African digital asset exchange that provides a platform for South Africans to buy, sell or trade a variety of different digital assets using the South African rand as the default fiat-buying currency.
ChainEX provides you with a secure, online platform from which you can purchase and trade with different digital assets. Not only do they provide a platform for you to trade, but they also reward you for the people you refer!