Currency refers to electronic currencies stored electronically in banks, and it is one of three forms of electronic currency. While paper money is still in use globally, up to 80% of the world’s currency is stored through banks electronically. Since its inception, it has grown from an alternative to doing business to a primary form of e-commerce, and it appears that it is only continuing to grow.
The first digital currency was created during the first internet bubble in the early 2000s. It was called E-Gold and was founded in 1996 by Gold & Sliver Reserve Inc, which allowed users to transfer small amounts of gold values electronically. In the spring of 2000, it became the first electronic currency to offer an exchange service for other currencies.
It was launched two years before PayPal, and by 2004 it had over 1 million accounts. Another service that started in 2006, Liberty Reserve, allowed its clients to transfer euros or dollars into Liberty Reserve funds, and then back again. Unfortunately, soon after it was revealed by the US government that criminals were using these sites and both of them were closed.
The difference between virtual and digital currencies and cryptocurrencies
While more and more banks are allowing to increase their online banking services, virtual currencies act as standalone funds whose value is created by the parent backer. However, the world’s most famous virtual currency, Bitcoin, does not conform to these specifications, and instead includes aspects of the three forms of electronic currency.
A digital currency differs from this in that it is money backed by an asset whose value is in the real world. With most of the world’s money stored in bank computers, it can be said that most of the world’s currency is now digital.
Cryptocurrencies refer to the forms of electronic money whose transfers are encrypted. By using blockchains to store data, they effectively link together and act as ledgers that users can use to maintain a consistent path of data. Due to the variety of ways in which its price can be affected, its value often fluctuates. Although cryptocurrencies carry a degree of anonymity, some are still required by law to disclose user identities.
The future of transactions
With more banks turning to digital currencies as the main form of electronic record keeping, and the growing emergence of a large variety of virtual and cryptocurrencies, it can be said that the future of transactions in the world will be conducted electronically. Perhaps in a hundred years, paper money could almost become a thing of the past.