In the past few years, digital currencies like Bitcoin and Ethereum have become very famous. In addition to becoming mainstream, it is also posing a strong challenge to established currencies all over the world. Many argue that digital currencies (cryptocurrencies) are the future of the global financial world.

There are many proponents who also reject digital currencies as being just a bubble, which is about to burst. However, with strong failures of traditional financial institutions, a growing inflation crisis and a pending recession in the aftermath of the COVID-19 pandemic, digital currencies are driving growth and change.

In this article, we are going to look at the top five advantages of digital currencies over cash and other existing financial systems. However, before we reach there, let us first look at what are digital currencies.

Digital Currencies: Meaning and Definition

A Digital Currency is 'money' created, generated, stored and processed in digital form. Some common examples of digital currencies include cryptocurrencies, digital currencies backed by central banks, e-vouchers, and e-cash.

The important thing to note is that digital currency is never available in physical form like cash currencies are. In order to access a digital currency, you will need a computer, laptop, cell phone, tablet, or any other electronic device.

Millions of people all over the world have started using digital currencies in the same way they use traditional cash. This means you can buy and sell items, goods, tickets, by using digital currencies like Bitcoin and others. Governments and international financial institutions have started exploring and experimenting with digital currencies in the past few years. To start trading in bitcoins go to bitcoineras.com

5 Advantages of Digital Currencies over regular Cash: The List

1. Very Low Transaction Fee-

One of the prime advantages of using digital currencies over regular cash is the low transaction fee. If you have been using platforms like PayPal or Net Banking, you will be aware of the high-interest rates they charge.

However, digital currencies have a very low rate of transaction fees, ranging from 0% to 1%. This is comparatively lower than the 7% to 10% charged by mainstream payment gateways all over the world.

2. No danger of being devalued because of Inflation-

One of the main advantages of digital currencies like Bitcoins is that they cannot be subject to Inflation. In fact, this advantage has made them a great source of investment in the last few years, in addition to gold.

The recent COVID-19 pandemic has shown that while traditional currencies were depreciating, Bitcoin and other crypto were growing in valuation. This not only makes digital currencies an attractive investment option but also protects them from faulty governmental mismanagement.

3. Promotes International Trade and Business-

Working with traditional currencies is not conducive to fast exchanges and international business. This is because a currency has to pass through several legal and official loopholes before reaching its appropriate destination.

Conversions, approvals, licenses and devaluations (because of high rates of interest charged) make the business unprofitable and disadvantageous. Digital currencies easily overcome such challenges and appear very conducive to promoting international trade and business.

4. Lesser chance of Forgery and Fraudulent activities-

The more popular a form of currency is the more criminal groups and individuals are involved. This is why scammers target credit, debit cardholders, and take control over their financial assets in different bank accounts.

Digital currencies need a signature, meaning that they connect and establish a secure channel between the sender and the receiver. This eliminates the chances of any mischief-taking place. It also promotes trust and confidence in financial transactions.

5. Transparent and Honest medium of Financial Transactions-

The common people do not know how governments and financial institutions control money; print it, or moderate inflation. There are a lot of doubts and confusion because of the same. Digital currencies are transparent, honest, and free from such regulations.

Governments cannot arbitrarily control, change, or influence them according to what benefits their political ends. This makes digital currencies very beneficial for international trade and in the interests of the consumers.

Conclusion

There is no doubt that digital currency, like Bitcoin, offer many advantages over traditional currencies. In this article, we discussed very briefly the nature and forms of digital currencies. We also looked at some of their major advantages. If you can think of some other advantages, please let us know in the comments section below.