Several Types of Digital Money For You To Choose!
Different with conventional currency, digital money has different type you can choose. If you have already known what is digital money, and planning to buy it, you have to know which type that you are going to buy. The rise of digital currencies has influenced people to invest and use it more these days especially for young generations. So, make sure to know several types of digital money to know which type suits you the best!
Types of Digital Money
There are currently 3 categories for digital money. Even though it will be divided into subcategories again, but you have to know the main one first to know how it works.
1. Central Bank Digital Currencies (CBDCs)
CBDCs are a form of digital currency issued by a nation’s central bank. It could be said that this digital money is more secure since it was managed and controlled by the central authority. So, CBDCs remove the necessary implementations of finance institutions which means there is a direct connection between the government and the average citizen.
There are two different sorts of CBDCs, depending on their use and method of implementation in the economy. Retail CBDCs are for daily transactions, much like fiat currencies. While Wholesale CBDCs are used for transactions conducted between banks and financial institutions.
2. Cryptocurrencies
Maybe this type is the one you heard the most. People talked about cryptocurrencies a lot and mentioned it was one of the good investment. But have you known what is cryptocurrency?
Cryptocurrencies are digital currencies with system of cryptography. Its method of exchange is encrypted in blockchain to supply and verify the transfer funds. The value of cryptocurrencies and the total market capitalization of the crypto markets have surged since cryptocurrencies became a popular investment class in 2017. The market capitalization of cryptocurrencies had topped $2 trillion by July 2021.
The first cryptocurrency and you must have heard a lot is Bitcoin.
3. Stablecoins
The last type of digital money is Stablecoins. It is developed to counter the price volatility of regular cryptocurrencies. They have no central authority to keep track of their ledgers. It can be likened with fiat currency that ensure they to remain stable. In recent years, the stablecoin market has grown. They have launched and developed around 200 stablecoins on February 2021.
Which One You Are Going To Buy?
There are currently three types of digital money you can choose if you plan to buy it. These types are available and are most used by people as digital currencies. Each type will have its own advantages and disadvantages. Just choose the one you think will benefit you. Remember to always analyze and research before deciding it. Also make sure to check the pros and cons of digital money to consider whether digital money is really worth it for you.
