Digital currencies, such as bitcoins, are a relatively recent phenomenon in the online Internet landscape and an emerging force in the financial sector. Although they do not conform to traditional institutional practices, they are increasingly accepted as viable commercial currencies.
New technologies, especially peer-to-peer consensual networks and cloud-based technologies such as blockchain, offer exciting innovation and competition potential. Technological advances have also resulted in rapid changes in the way we manage our money (eg. online and contactless payments, smartphone applications, etc.). The emergence of digital currencies such as Bitcoin has opened up new opportunities to support economic growth.
Role as Money
Money is a social convention that particularly facilitates trade when a double coincidence of desires is missing, solving the problem of lack of self-confidence in the exchange. In practice, money is generally defined by the three functions it traditionally exercises: first, a unit of account, since it serves as a general measure of the value of goods and services marketed in an economy; secondly, a means of exchange accepted for the payment of goods and services and for the payment of debts; third, a store of value, a way of storing wealth, to transfer the purchasing power of the present to the future.
Like this type of money, crypto-currencies are fiduciary. The digital form of cryptocurrencies and the lack of connection to a specific jurisdiction allow for a truly global and easily accessible currency that could facilitate world trade.
Bitcoin as a Digital currency
Bitcoin was introduced in 2009 and was the first convertible digital convertible currency and the first cryptocurrency. Bitcoin has been developed as an electronic payment system that allows two parties to do business directly on the Internet without the need for a trusted external intermediary.
ICT innovation is generating increasing interest in the currency, which is reflected in an increase in BTC’s exchange rate. Bitcoin is very popular because:
- It can be converted into traditional currencies such as the dollar
- It does not depend on a state, a bank, a company or an organization;
- is not subject to any control by the public authorities;
- The exchange rate is unaffected by crises, wars, policies or inflation.
- It can be used in more portals and online stores.
- It can be converted into a real currency in which withdrawals can be mad
The banking system and its scope maybe reduced, in particular, because of the continued development of a parallel and independent virtual cash circulation system. Globalization, communication and technological innovation can help to increase the demand for independent money (or equivalent currency) for micro-payments or payments for Internet services. Bitcoin is a currency independent of any banking system and is controlled by a community of enthusiasts. This independence can lead to the storage of values. A stable exchange rate for this currency will be of great importance. While other currencies lose value, Bitcoin can protect against inflation.
The digital currency has an impact on the global monetary system. This has an impact on the demand for real money, which causes it to grow or fall. This can be problematic for predicting the volume of real money.
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