Currency refers to electronic currencies stored electronically in banks and constitutes one of the three forms of electronic currency. While paper money is still used globally, up to 80% of the world’s currency is stored in banks electronically. Since its inception, it has grown from a business alternative to a primary form of e-commerce, and it only seems to continue to grow.
The first digital currency was created during the first internet bubble in the early 2000s. Called E-Gold, it was founded in 1996 by Gold & Sliver Reserve Inc, which allowed users to transfer small amounts of gold electronically. In the spring of 2000, it became the first electronic currency to offer an exchange service for other currencies.
Launched two years before PayPal, by 2004 it had more than a million accounts. Another service launched in 2006, Liberty Reserve, allowed its customers to convert euros or dollars into Liberty Reserve money and then back. Unfortunately, shortly after the US government discovered that criminals were using these websites and both were shut down.
The difference between virtual, digital and crypto currencies
As more and more banks allow electronic banking to increase, virtual currencies function as independent money whose value is created by their original sponsor. However, the world’s most famous virtual currency, Bitcoin, does not fit this specification, instead encompassing aspects of all three forms of electronic currency.
Digital currency differs from this as money backed by an asset worth the equivalent of its real-world value. Since most of the world’s money is stored in bank computers, it can be said that most of the world’s currency is now digital.
Cryptocurrencies refer to forms of electronic money whose transactions are encrypted. Using blockchains to store data, they are effectively linked and act as ledgers that users can use to track data consistently. Because of the different ways in which its price can be influenced, its value often fluctuates. Although cryptocurrencies carry a certain degree of anonymity, some are still required by law to disclose the identity of their users.
The future of transactions
With more and more banks turning to digital currencies as their main form of electronic record keeping and the increasing emergence of a large number of virtual and cryptocurrencies, it is safe to say that the future of global transactions will be conducted electronically. Perhaps in a hundred years, paper money could be a thing of the past.