Tag: digital currency

What is Digital Currency? and types of Digital Currencies

Since the arrival of Web 2.0, we have witnessed many changes in human lifestyle, especially the ones that directly relate to the internet. Whether from static pages to dynamic web pages, social media advancement from mails to apps or from cash-driven society to electronic money transactions. Digital currency, or digital money, is a new fad that is driving people crazy and the hype it has created since its inception is absolutely unbelievable.

What is Digital Currency?

The word anatomy certainly belongs to the science that studies the structure of the body, but it goes along quite well when someone is describing digital currency. The human body consists mainly of water and organic compounds, while digital currency or digital money is any form of money, currency, money-like asset or payment that is primarily managed, stored or exchanged in electronic form, especially over the internet.

Digital currencies or electronic currencies are known for making secure, transparent and trusted payments that exist only in a virtual format and are not tangible. They are mainly divided into two territories – centralised currencies and decentralised currencies. Now, you should know one thing upfront – centralised currencies are regulated and need licenses to operate, while decentralised currencies are complicated to regulate.

The money you have in your bank accounts is called electronic money. It does not fall in the category of digital currency because you can take your bank stored money out in cash form anytime you want, just by visiting the banks or ATMs. However, you can’t do such acts in the case of digital money as it never takes physical form, unlike currencies with printed banknotes or minted coins, which makes it exchangeable only via digital pars.

Types of Digital Currencies

Cryptocurrency

Almost everyone on this planet earth is aware of cryptocurrency due to its popularity over the last few years. It is a type of digital currency designed to work as a medium of exchange through a computer network that does not rely on any central authority, making it supremely rebellious. Cryptocurrencies are categorised into DeFi, NFT, utility tokens, and store of value tokens like Ethereum, Bitcoin and Litecoin.

Cryptocurrency uses encryption to verify transactions, and it is a digital currency with the actual value and worth, though it keeps fluctuating and volatile. It doesn’t belong to any specific nation and isn’t integrated with any one country’s economy. The first-ever cryptocurrency was Bitcoin, founded in 2009, and even today, it is a widely accepted and one of the most highly valued cryptocurrencies in the world.

Virtual Currency

Virtual currency is a type of digital currency which is not issued or controlled by a central bank. Also, in some cases, it acts as a substitute for real currency (only when it has an equivalent value), and then it is referred to as “convertible” virtual currency. They are further categorised by currency flow and classified as closed virtual currencies and convertible virtual currencies.

Central Bank Digital Currency or CBDC

Central Bank Digital Currency or CBDC is a type of digital currency issued by a central bank. The idea of Central Bank Digital Currency came from cryptocurrencies, but in reality, it differs from cryptocurrencies. The significant difference between these two is centralisation, where instead of putting money, the central bank issues electronic coins and accounts. The government backs all these coins and accounts, making the currency a fully trusted digital currency.

Evolution Of Currency From Traditional Method To Security Token

What is the buzz about the term “token”?

The emphasis placed on the terms of “token” and “account” used by the cryptocurrency community and central banking community as mentioned above aims to capture the different ways in which these terms are used by different people about different concepts. Recognition of these terms can help identify areas of misalignment and create problems in the legal framework and supervisory system of digital currencies and so-called tokenized financial markets.

The term is part of an industry phenomenon known as tokenization, which transforms real assets into digital tokens. Security brands have been under discussion for some time, and at least one company wants to put them to the test. In the case of securities tokens, trading assets such as stocks and fixed-income securities are converted into digital assets using blockchain technology, the virtual book of activities that consists of cryptocurrencies such as Bitcoin.

Are security tokens a novel form of assets?

securities tokens and tokenized securities are often mixed up in the new age of blockchain, but it is imperative to understand them not as separate concepts, but about each other. Security brands, in particular, are a form of digital assets that, like cryptocurrencies, act as a value transfer tool while maintaining regulatory protection for traditional securities. Security marks are programmable crypto assets that enjoy the regulatory protection associated with traditional securities. Tokenised securities function in the same way as traditional off-chain securities, except that they are stored and sold on an exchange or blockchain network. Simply put, tokenized securities are digital representations of traditional securities to expand their market reach and increase market liquidity.

Are tokens different from coins?

Blockchain tokens are valuable but are not considered money like crypto coins. Many crypto projects issue their tokens as a representation of an asset or as use-value. They give these tokens to their investors through public sales called ICO (Initial Coin Offering).

Blockchains allow tokens to be used in the community to vote on important business decisions or technical changes to the platform, giving them more functionality than traditional crypto coins. When we talk about tokens and cryptocurrencies, we should not associate the value of these tokens with public systems, such as Ethereum, which wants to introduce new smart contracts defined by tokens without explicit use or transaction value. For this purpose, the creation of tokens can be used to detect the difference between security tokens and tokens. Security marks are created for investment, while utility marks can be created to finance an ICO or create an internal economy on a project as a blockchain. An ICO (or OST offer) is made to sell digital tokens to the general public on a cryptocurrency exchange. The main difference that stands out is the fact that ICO tokens are offered as actual coins, which are digital and classified by utility value. With an ICO token, a new ICO currency is generated ad infinitum. An ICOs value is speculative and results from the perceived utility value that the buyer expects from him.

A better balance can be found in securities brands that are digital, liquid contracts for a fraction of an asset (e.g. A house, a car, a paint job, a company’s equity, etc.). Security brands are a natural bridge between the traditional financial sector and blockchain and benefit from both. The securities token ideas, which are based on partial ownership of real assets, are well structured, meaning that investors can expect their ownership share to remain on the blockchain register.

Although tokenized assets are a promising use case for blockchain technology, there are still some major regulatory hurdles. It is unclear whether ownership of blockchain-linked tokens remains unclear, and the terms may not have legal status.

A boom of startups

A few years ago, innovations in financial markets began to spark discussions about digital tokens and the tokenization of financial assets. Initial coin offerings (ICOs) played an important role in arousing interest in the cryptocurrency market. Startups in the cryptocurrency market produce coins or tokens that are offered to investors by an initial coin offering (ICO) in exchange for legal money or digital currency. Start-ups sell their shares to investors in an initial public offering. While IPOs trade directly with investors, ICOs trade through crowdfunding with eager supporters of their projects.

so this is all about security coins, also read more about:  How Can Blockchain Solve Problems Related To Senior Citizens?

 

Should you still invest in Dogecoin?

By 2024, the digital currency will have grown by almost 1,400 times.
This year has witnessed a surge in interest in Dogecoin, a cryptocurrency that was launched in 2013 and now has a market capitalization of about $9 billion, placing it among the top twenty cryptocurrencies in the world.
Even though Dogecoin’s price is currently about 7 cents, the coin, which trades on an exchange under the symbol “DOGE,” is expected to increase by 1,400 percent in 2024. The cryptocurrency, pronounced “dohj coin,” has exploded in popularity this year, with several celebrities, including Tesla CEO Elon Musk, advertising it on his path to new highs.
So, what is the state of the DOGE? Should you invest in Dogecoin? Examining the cryptocurrency’s history, comparing it to competitors, and evaluating its phenomenal growth will properly answer the question.
The year 2021 will be remembered as the Year of the Meme
For investors, Dogecoin is a fascinating invention,” said Julian Hosp, CEO, and co-founder of DeFi, a decentralized finance service that allows anyone to lend cryptocurrency in exchange for interest. “It’s amusing when you realize Dogecoin was originally conceived as a joke based on a meme,” Hosp explains. That’s correct. Dogecoin’s emblem is a Shiba Inu dog that has become an internet sensation.
Dogecoin’s logo is a Shiba Inu dog that became an internet hit in 2013 for being funny.
Unlike Bitcoin, it is not being considered as a greater store of value: There is currently more than 129 billion DOGE in circulation. Only over 19 million Bitcoins are in circulation, with only 21 million possible. The number of Dogecoin units that can be created has no limit, and billions more will be created each year. That’s a lot of contradictory theories.
The plentiful supply may explain why a coin that was worth 35 times its value a year ago and more than 10 times its value at the start of the year is now only worth about 7 cents. Yes, in reality, a ridiculous token will take off in 2021, the same year that “meme stocks” like GameStop (GME), AMC Entertainment (AMC), and Bed Bath & Beyond (BBBY) skyrocketed in value thanks to Reddit excitement.
Determining the DOGE Value
George Chrysochou, an investor and global head of marketing for Financer.com, sees more red signs than DOGE’s meme status alone.
“The idea is driven by the community, but it has never been formally adopted,” Chrysochou explains. “There isn’t even an official development plan or a white paper accessible.
Also read: Elon Musk claims Tesla will accept Bitcoin as a payment method.
Its founder and main developers departed the project in 2015, and they have repeatedly indicated that it is overrated. “These are early implementation factors to consider,” says the author. In cryptocurrencies, where there are no earnings expectations or dividends, subjective concerns become even more important.
However, there are certain objective techniques for measuring a currency’s fair worth, such as comparing it to other cryptocurrencies like Bitcoin.
The simplest approach to compare DOGE and BTC is to price them in Satoshis, or sats, which are one hundred millionth of a Bitcoin.
A coin with the potential for unauthorized dilution with a source in such an online joke is probably not the greatest choice, except for speculative investors. Publicity stunts, even if unwittingly supplied by Elon Musk, aren’t enough to make Dogecoin a good investment.
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