00:00Hi friends, good day. Today, let us try to understand about what is digital currency, what are the types of digital currency, benefits and disadvantages of digital currency through this video.
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00:36What is digital currency?
00:40Digital currency is a form of currency that is available exclusively in electric form.
00:48Digital currency generally do not have a physical form unlike currencies with printed banknotes or minted coins.
00:57The lack of physical form allows nearly instantaneous transactions over the internet and removes the cost associated with distributing notes and coins.
01:08It is accounted for and transferred using electronic codes in computers.
01:13It is also called as digital money, electronic money, electronic cash or cyber cash.
01:22Digital currency is only accessible with computers or mobile phones or electronic wallets connected to the internet or any other designated networks as they exist only in electronic form.
01:35Since they have no intermediary, these are one of the cheapest methods to trade currencies.
01:42Like any standard currency, digital currencies can be used to purchase goods as well as pay for services but they are restricted to gaming sites, gambling portals or social networks.
01:56Now let's look into the types of digital currency.
02:00Cryptocurrency, virtual currency and central bank digital currency.
02:05Cryptocurrency, it is the digital currency that has the true worth.
02:10Cryptocurrency is a form of payment that can be exchanged online for goods and services.
02:16Many companies have issued their own currencies which are often called as tokens.
02:21And these can be traded specifically for the goods and services provided by that company.
02:27One needs to exchange real currency for the cryptocurrency to access the good or service.
02:33Cryptocurrency work using a technology called blockchain.
02:37Blockchain is a decentralized technology which is spread across many computers that manages and record transactions.
02:45Blockchain is a specific type of database.
02:48It stores data in blocks that are then chained together.
02:53Virtual Currency, virtual currency is a type of unregulated digital currency.
02:58It is a digital currency that is utilized inside a particular network.
03:03It is not issued or controlled by a central bank.
03:06For example, all FarmVille players approach in-game virtual money coins with which they can buy things for their ranch.
03:14Virtual currencies are typically issued by private issuers and used amongst specific virtual commodities.
03:23It is just substantial inside the predefined network.
03:27One cannot take the FarmVille coins and use them to buy something from McDonalds.
03:32As a result of its unregulated nature, a virtual currency can experience extensive price fluctuations.
03:39The value of virtual currency is mainly driven by the sentiment of the traders.
03:45Central Bank Digital Currency
03:48A central bank digital currency, i.e. CBDC, utilizes technology to represent a country's official currency in digital form.
03:56It is also electronic form of central bank money that citizens can use to make digital payments and store value.
04:04The three main elements of CBDC are, it is a digital currency issued by central bank and it is universally accessible.
04:15Benefits of Digital Currency
04:19Faster Transactions
04:21With digital currency, one can make transactions immediately without the need for a middleman.
04:27For example, if you buy a house, there are many steps that one must go through before the transaction is complete, like getting approval from the bank etc.
04:36But with digital currency, the transaction can be done immediately.
04:41Constant Payment Tracking
04:43With digital currency, one can track their money every second of the day without wondering where it might be.
04:50Fraud Protection
04:52Through using digital currency, one can directly send the funds to whomever they want without even giving out any personal information like credit card where there is a risk of potential information being stolen.
05:05Easy Accountability
05:07The best thing about digital currency is that it is available to everyone.
05:13It is estimated that 2 billion people across the globe have access to the internet either by phone or through computer.
05:23Now let's look into the disadvantages of digital currency.
05:28Security Issues
05:30Even though digital currency can protect from using the personal information online, the currency itself is still vulnerable to attacks.
05:39It can be hacked by the hackers.
05:43Accessible To Everyone
05:44This is a pro or an advantage as well as a disadvantage.
05:50On one hand, it is nice that anyone with skill could gain a fortune just by forming digital currency but on the other hand, this also means that those individuals involved in the criminal activities have access as well.
06:04They can be used by criminals to fund various criminal activities.
