Digital currency

Digital currency refers to any form of currency that exists purely in digital form and is not physically tangible like traditional banknotes or coins. Digital currencies encompass a wide range of assets, including cryptocurrencies like Bitcoin, central bank digital currencies (CBDCs), and virtual currencies used in online ecosystems. Unlike physical money, digital currencies can be transferred instantly and securely across the globe, offering benefits such as fast transactions, lower fees, and enhanced security through encryption and blockchain technology.

Digital currencies can be categorized into centralized and decentralized types. Centralized digital currencies, such as CBDCs, are issued and regulated by central authorities, such as governments or financial institutions. These currencies are designed to complement or replace physical cash while retaining the trust and stability of traditional fiat money. Decentralized digital currencies, on the other hand, operate on blockchain networks and are not controlled by any single entity. Cryptocurrencies like Bitcoin and Ethereum are prime examples of decentralized digital currencies, providing users with greater autonomy and transparency.

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