Easy explaination of Digital Currency
WHAT IS DIGITAL CURRENCY?
Digital Currency (or Cryptocurrency) are just like any other currency that you are familiar with, such as US dollars. You can use digital currencies to buy different things, you can exchange them with another currency, you can buy them or sell them...do whatever you want. Currently there are hundreds of different digital currencies such as Bitcoins,steem,steem dollars etc. You have the ownership of a digital currency by knowing the address where it is stored. It is actually stored somewhere which you don’t have to worry about. All you have to do is keep its address safe. It is this address that you’ll be sharing if you ever want to make any transaction. Where will you store this address? that is exactly what we’ll be talking about shortly.
HOW TO STORE DIGITAL CURRENCY?
As I mentioned earlier, you do not store digital currency, but you store its address. Place where you store your digital currency address is called a wallet. There are 4 most common types of wallets. These are…
Mobile Wallets :
Its an application that can be downloaded on your smartphone. You can use it to pay for anything, anywhere.
Online Wallets :
These are web-based wallets where you can save your digital currency address online. Basically, your digital currency address( private keys) is stored on a different computer connected to the internet. Its advantage is that you can access them from anywhere, and not just from one particular device. However, you should choose the online wallet which is most trusted.
Hardware Wallets :
These are the Devices which hold the addresses and private keys without being connected to any network. This makes them very safe from hackers and gives you full control over your private keys ( addresses). It is best for the users who want to keep the digital currency for a long time.
Paper Wallets :
This is also a safe way to store your digital currency addresses. Addresses are stored in the form of QR codes printed on a paper. You can scan the code at any time to get the address of your digital currency.
ADVANTAGES OF DIGITAL CURRENCY
Cheaper transactions :
digital currency transaction fees are a lot cheaper than traditional ways of transactions through banks, and sometimes there is no fee at all.
Zero account fee :
Many banks charge their users a monthly fee for holding an account. Whereas, digital currency wallet can be created by anyone free of cost.
No trusting issues :
When you deposit your money in a bank, you are trusting the bank to have the same amount in it whenever you want to withdraw it. However, this is not the case in the time financial crisis where bank can restrict you to limited withdrawal. Using digital currency gives you complete control over your money, It's like carrying your entire wealth in one address stored in your mobile phone which is kept in your pocket! Basically there is no third-party that you have to trust.
Faster money transfer :
Sender, receiver and the internet connection that is all you need to transfer money. Digital currency transfer is lightning fast no matter how far the sender is from the receiver.
I hope you liked this post ..if you did than please upvote it. I tried to expain digital currency for people who have no idea about it. I am new to this platform ...and your suggestions are much appreciated.
cheers!