We live for our dreams and sometimes it’s hard to complete them due to some financial problems. So we should try to choose that path in which money doesn’t stop you to reach your destination. Since we all need money for everything it’s one of the most important things.

We always try to make proper planning to spend it wisely and we also use different means to spend it. But when it’s come to digital money or currency there is a lot of public who just run away from it because they don’t have a proper understanding of it. So, let’s begin with currency. 

What is Currency?


Currency is the medium of exchange of goods and services in the form of coins or papers. It’s one of the methods of payment which is issued by the government, circulated within one’s country jurisdiction.

The modern aspect of money is that it is uniformly worthless as bills are in pieces of paper rather than of coincide up of gold, silver, or bronze.

The concept of paper currency has evolved from china around 1000 BC ago but this idea has developed purely after a very long time. Modern currency in the form of paper issued in

various denominations with some uses of coins as a medium.

According to the research of Unites Nations and a blog on WorldAtlas.com around 180 currencies were recognized.

So, this is the basic meaning of currency now let’s move on to our topic, i.e Digital Currency.

Digital Currency

Digital currency is that form of currency that is available only in digital or electronic form. It has other names too like digital money, electronic money, or digital currency.

This type of currency is only accessible through electronic devices. These have no government backing.

As digital currencies required no intermediate mediums therefore they’re also one of the cheapest methods to trade with.

As physical currencies like notes and coin are tangible and only used by their owners whereas Digital currencies are intangible and they can be owned or transacted by use of electronic wallets or computers or any other authorized sites. It can be used for various purposes like paying bills, purchasing goods, etc. And can be restricted in some illegal dealings like smuggling weapons, on gaming sites, etc.

In contrast with digital currency there exists

Types Of Digital Currency

Virtual Currency

Virtual Currencies are a kind of unregulated, decentralized digital currency that is only available in electronic form. It is controlled by its developer, founding organizations. It is accepted among the members of a specific virtual community. 

The European Banking Authority defined virtual currency as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”. 


Cryptocurrency is a form of virtual currency that uses cryptography to secure its user’s data and to verify transactions and also controls the use of new currencies units. 

Among which Bitcoin and Ethereum are the most important ones. As this is all about currencies, and you must have got a piece of basic knowledge about it. Now the big question is why we should or shouldn’t prefer.

As recent media and government attention has stoked the debate surrounding the use of digital currencies in business, it has become evident that there are still many unanswered questions and discussions to be had around the risks and opportunities of digital currencies.

So let’s move on its merits and demerits so that you may create a proper opinion about it.

Merits Of Digital Currency

1) Lower Transaction Cost

Credit card charges can be very low especially for international payments. Payments may range from 2 to 5 percent or maybe more on various transactions.

2) No Chargebacks In

There are various fraud means but by using digital Currencies like Bitcoin you stop the fraud on chargebacks. Your sale is complete when you receive your transactions from your customer.

3) Faster receipts of funds

Transactions with digital means are usually much faster, completed within minutes which is much better than other financial payments systems.

4) No Inflation

This being a serious problem in various countries where some central banks inflate their currency to make themselves spotless. By using Bitcoins r any other currency there is no inflation due to controlled quantity limit and in other algorithms in the system.

5) Better for international transactions. 

As we all know that making your business international will definitely increase your, you diversify to mitigate economic fluctuations in any particular area. This will give more benefits and increase your revenue and worldwide connections too.

As there are always being two faces of a coin and there is always a good and a not so good points of larger no. of things. So, digital currencies also

have a not-so-good side.

Demerits Of Digital Currency

1) Not Traceable

As digital currencies are all about the internet which makes tracing a much difficult task to do.

For instance, criminals could use it to make payments in other countries. It’s one of the major problems for governmental authorities.

As it doesn’t have any significant effect on the users. It provides anonymity to the users which are good part among the not so good one.

2) Forgery

It’s one of the unique risks in digital cash as it uses the internet and we all know that how rapidly our technology is changing and there may be

some hackers who may sneak into the system. They may generate more coins without payment to earn that cash.

This will affect both the users and the banks too which may break the digital market.

3) Irreversible Payment

As there is no one to control this whole system completely so, if by mistake you do a wrong transfer then you may only get your refund if that person wants.

And to use the digital money you need to sell the crypto.

4)Losing your wallet or password

If you keep your money on your laptop or your mobile phones and somehow you lose it then you also lose your money. You can’t even complain to the police or any other person can get it.

So here we end with merits and demerits.

Countries And Digital-Currency

Now, let’s move on to the other aspects as there is the type of competition going on between countries regarding this.

Let’s get to know what’s new in this to choose the best and balanced one.

Firstly I would like to start with China, as it’s on news headlines.

Among the world’s biggest economies. China has become a pro you can say in developing a Central Bank Digital Currency (CBDC). The Asian giant completed a trial on Digital Currency/Electronic Payment (DP/EP), as its currency came in September and rolling down on major e-commerce platforms in that country itself.

It’s the digital form of yuan ( national currency of China) And backed by China’s central bank and it’s under development for about five years.

Currently, China is converting its yuan into digital form and providing it to business holders and citizens via mobile technology.

So, let’s talk about the change that China has made.

E- Yuan

China's E-Yuan digital currency

The basic difference between DC/EP and cryptocurrencies is their legal status. Digital Currencies can be used for making payments and these are under legal tender but with crypto, it’s still unclear in China.

Secondly, decentralization means this whole system’s economics and supply are not controlled by a single center. But somewhere it’s under the government of China.

Lastly, the difference between crypto and digital currency is that crypto transactions are anonymous whereas there not sure assurance as later backed by the government.

Now let’s talk about one of the most hi-tech countries Japan.

Japan And India

Japan is also hearing to launch digital currency for both public as well as for private sectors.

According to the Japan times, Japan is working in digital currency (Digital Currency Forum), to create one as same as that of Facebook Libra, by 2023.

The study is being feasible to provide a virtual currency by 2021.

In India, the regulators and governments have been skeptical about these currencies and are apprehensive about the associated risks.

“Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalize it,” the central bank had said in a report in January.

It can be noted that the RBI had earlier announced its intention to come out with an official digital currency, in the face of the proliferation of cryptocurrencies like Bitcoin about which the central bank has had many concerns.


So, there is a lot about Digital currency as we can’t compare every country one by one here but I hope this helped you in basic knowledge about the topic and definitely, you now have your views.

There is the possibility that crypto will be floated on the Nasdaq, which would further add credibility to blockchain and its uses as an alternative to conventional currencies. Some predict that all that crypto needs is a verified exchange-traded fund (ETF). 

An ETF would make it easier for people to invest in Bitcoin, but there still needs to be the demand to want to invest in crypto, which might not automatically be generated with a fund.

So, lastly, let’s end this with a little bit of discussion about its coming days. The emergence of Digital Currency has sparked a debate about its future and that of other cryptocurrencies. Despite Bitcoin’s recent issues, its success since its 2009 launch has inspired the creation of alternative cryptocurrencies such as Etherium, Litecoin, and Ripple. A cryptocurrency that aspires to become part of the mainstream financial system would have to satisfy very divergent criteria. While that possibility looks remote, there is little doubt that Bitcoin’s success or failure in dealing with the challenges it faces may determine the fortunes of other cryptocurrencies in the years ahead.

One Reply to “What Is Digital Currency? Merits And Demerits Explained”

Leave a Reply

Your email address will not be published.