Digital Currency: What Are They And Their Types

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Digital Currency: What Are They And Their Types

Digital currency is an electronic form that is able to exchange for transactions access only in digital without paper money and coins. It’s also called electronic money or cybercash. Digital currencies are only accessed by computers or mobile phones because they are in electronic form.

Digital currency is 2 major types under the terms of legal status. 

  • Centralized

Centralized one is controlled by the central government and available to the public as a physical version of money. for example XRP

  • Decentralized

Decentralized one is controlled by a broader range of users, not by any financial government and after the transaction is verified by the blockchain network. for example Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH)

Let’s dive into the types of Digital currency.

1. Cryptocurrency

Cryptocurrency is digital money that doesn’t have any access to a bank or financial institution to verify a transaction. It’s based on complex mathematical algorithms. It used most of the people for their investment. In crypto currency transactions, it has been verified on a blockchain protocol.

Examples for Cryptocurrencies are Bitcoin(BTC), Ethereum (ETH), Binance Coin (BNB) etc……

2. Central Bank Digital Currencies (CBDCs)

Central bank digital currencies (CBDCs) are issued and controlled by a central bank. Many countries are finding the way CBDCs affect their economies and security. 

Examples for CBDCs are Sand Dollar, Naira in Nigeria, Digital Rupee launched by the Reserve bank of India etc…..

3. Virtual currencies

Virtual currency (VC) is a digital format automating currency in virtual society and controlled by a central bank. Most people can use it to earn real currency by purchasing and exchanging a VC as a medium.

Examples for Virtual Currency are Bitcoin (BTC), XRP, E-gold, Zcash etc…..

4. Stablecoins

Stablecoin is a cryptocurrency that fixes its value. It is pegged by cryptocurrencies and fiat currency to stabilize their value in the blockchain environment.

Examples for Stablecoins are Tether (USDT), USD Coin (USDC), Dai (DAI), Binance USD (BUSD) etc…