Before crypto assets (cryptocurrency) developed rapidly, digital money actually existed first. Basically, digital currency is a form of money that exists in electronic or digital form and not in physical form, such as banknotes or coins.
Please note, digital money is not available in a physical form that can be held, but is in the form of data stored on electronic devices, including debit or credit cards, digital wallets on smartphones, or online bank accounts.
Meanwhile, the main differences between digital money and physical money cover physical form, the types of transactions carried out, the ease of carrying them, and the security factor. Some examples of digital money that are commonly used in everyday life include digital wallets or e-wallets, debit or credit cards, online bank transfers, cryptocurrencies, and prepaid cards.
So, to better understand what digital money is, the types, the benefits of using it, and the differences with crypto assets, see the full review below.
What is Digital Money?
Digital money is a form of money that exists in the form of electronic data. This means that the value of money is represented in the form of numbers and information that can be processed and stored by electronic devices, such as computers, smartphones and servers. The basic concept of digital money involves a change from physical to electronic in terms of storage and transaction of monetary value.
In digital money, there is no physical form such as paper or coins that can be seen or touched. Instead, the monetary value is represented by data in a computer system or electronic device. This concept requires the existence of technology that supports security and authorization to ensure that the information remains secure and cannot be easily manipulated.
It should be noted that the process of converting money from physical form to electronic data involves several technical and infrastructural steps. Some of the common ways in which digital money is embodied in electronic data form are through registration and identification, account creation, store of value, transactions, security and encryption, and transaction tracking.
Types of Digital Currency
After knowing what digital money is, you also need to know what the types of digital currency are. Digital money itself is actually often used in the banking system. Besides that, crypto is also a decentralized digital currency. The following are the types of digital currency that you need to know, about:
1. Ewallets
E-wallets are the most popular type of digital money in Indonesia. With e-wallets, users can do online and offline transactions easily and quickly.
2. Crypto
Crypto, or cryptocurrency, is a form of digital money that utilizes blockchain technology. One of the most popular types of cryptocurrency in the world is Bitcoin. Apart from that, there are also other types of crypto assets, such as Ethereum, Litecoin, and Ripple. However, the use of cryptocurrency in Indonesia is still relatively new and has not been officially regulated by the government.
3. QR Code
QR Code Payment is a payment mechanism that utilizes a QR code (Qr Code) for transactions. The way the QR code works is by scanning the QR code at the merchant, then paying via the e-wallet mobile banking application.
4. Banking
Mobile banking is a service from a bank that allows users to transact via the mobile banking application. This service itself can be used to send and receive money, buy credit, and pay bills.
5. Prepaid Card
A prepaid card is a type of digital currency that is used for transactions at merchants. This prepaid card is topped up with a certain amount of balance before being used for transactions and can be topped up according to the user’s needs.
6. Internet Banking
Internet banking is a service from a bank that allows users to transact via the bank’s website. This service can be used to send and receive money, buy credit, and pay bills.
7.Digital Gold
Digital gold is a type of digital money held by gold assets, for example. On the gold investment platform, users can invest in gold digitally.
What Are the Benefits of Using Digital Money?
Currently, the presence of digital money in Indonesia is increasingly attracting many enthusiasts. With its popularity, digital money has also become a choice, especially for young people. This is inseparable from the growth of digitalization in various aspects of life, including financial matters. The following are some of the benefits of using digital money, including:
1. Ease of Transaction
The first benefit of using digital money is the ease and efficiency of transactions. Through the use of digital money, anyone can transact easily without the need to carry physical cash or credit cards. Thus, transactions can take place quickly and easily, both online and offline.
2. Encouraging Economic Growth
Digital money is also useful for driving economic growth, especially in the small and medium enterprises (SMEs) sector. Through the use of digital money, business actors can expand markets and increase efficiency in transactions, which will ultimately increase productivity and income.
3. Improving Financial Accessibility
Another benefit of digital money is that it increases public financial accessibility. Through the presence of e-wallet, mobile banking, and internet banking services, people can easily transact, send and receive money, and pay bills safely and quickly.
What’s the Difference between Digital Money and Crypto?
So, now that you understand what the benefits of using digital money are,Furthermore, it is also important to know the difference between digital money and crypto. This is because people often mistakenly think that these two types of money are the same, even though digital money and crypto actually have some differences.
In terms of advantages, conventional digital money excels in its ease of access. Conventional digital money can be accessed through banking networks and payment systems, enabling fast and easy transactions. In addition, conventional digital money tends to be more stable in value because it is related to traditional currencies and is issued by reputable institutions.
Meanwhile, cryptocurrencies are not dependent on financial institutions or governments, thereby avoiding some of the risks associated with central control. On the other hand, some crypto assets have experienced a significant increase in value in a short period of time, providing opportunities for profitable investments. Not only that, cryptocurrency transactions use strong cryptographic technology, making them safer and more difficult to manipulate.
Meanwhile, judging from how it works, digital money works through financial institutions, such as banks or electronic payment companies. In this case, the money is stored in data form in a bank account or debit or credit card. In addition, the transaction involves an authentication process that involves verification of the identity and validity of the transaction by the relevant financial institution.
On the other hand, cryptocurrency works based on blockchain technology, which is a decentralized ledger that records all transactions. Cryptocurrency transactions are verified by a network of computers (miners/validators) and each transaction is added to a new block in the blockchain after validation.
Conclusion
In conclusion, some of the benefits of digital money are ease of transactions, driving economic growth, and increasing financial accessibility. In addition, its advantages include easier financial management, security and authentication, convenience, and payment flexibility.
Meanwhile, the benefits and advantages of cryptocurrencies and crypto assets include decentralization, security, value growth potential, transparency, and innovation potential.
It should also be noted that an understanding of digital money is very important in an increasingly connected modern era. Fundamentally, this is important because of the transition to digital payments, data security, better financial management, technological innovation, and better decision-making.
Ultimately, in order to adapt to economic and technological changes, a solid understanding of digital money is a must. The reason is that this will help anyone take advantage of the potential offered by the digital world today and in the future.
So, now you understand what digital money is, the types, the benefits of using it, and the differences with crypto assets. Furthermore, if you are interested in or want to invest in crypto, it’s a good idea to know the prices and developments in the crypto world in advance.
Apart from that, you also have to know what the risks of investing in crypto are to develop a better investment strategy. To make crypto investments safely and comfortably, you can use the most popular crypto application platform, namely INDODAX.
In the INDODAX application, a new feature called staking crypto (EARN) has also arrived. With this feature, you can lock up your crypto assets and get rewarded, just like interest on savings. Interesting right?
So, what are you waiting for? Let’s invest in crypto right now on INDODAX!
