The digital currency is virtual money, which means that it does not physically exist, and all purchases or transactions made with it must be electronic. It has no geographical or political borders. It is possible to make payments or collections to a person in any part of the world; In addition, the transfers are anonymous, and there is the benefit of making quick payments and thus avoiding additional payments charges for transactions. Likewise, these currencies are issued and backed by the countries’ central banks.

But What Types of Digital Currencies Exist?

Types of Digital Currencies

Early sources indicate that in early 2009, an anonymous programmer or a group of programmers under the pseudonym Satoshi Nakamoto published an article referring to one of the digital currencies, bitcoin, as a new decentralized transaction system. Bitcoin is the first digital currency with the highest price in the market. In addition to bitcoin, several types of digital currency have emerged; among them, we can mention: Ethereum, Dogecoin, and Cardano.

One of its main characteristics remains the possibility of making transfers without the existence of an intermediary, such as banks or the State, so its control is decentralized. At this point is where the difference between a digital currency and a cryptocurrency lies. Since banks back the first and second one does not need any intermediary.

In terms of security, this dynamic is base on cryptography or blockchains (blockchain), which makes it work as a digital and tamper-proof accounting book. All transactions carried out are permanently and verifiably reflected.

How to Invest in a Cryptocurrency?

There are some platforms where it is possible to acquire bitcoins, and where there are a large number of registered users, and it is possible to buy by registering a credit or debit card.

The Most Famous Platforms are:

  • Coinbase
  • Kraken
  • LocalBitcoins

It is a straightforward process. You have to register with your data and create an account. After this, the verification phase enters, which usually takes a while. Once the version remains confirmed, you can start shopping.

Cryptocurrencies, How do they Work?

Cryptocurrencies work very differently from traditional payments; some of them are:

It Is Store in a Digital Wallet

Each coin contains a code stored in a digital wallet or English as a digital wallet on a computer or cell phone with private keys.

It Lacks Legal Protections

Where the provider can give some guarantees for any fraudulent purchase and thus recover the money; with a digital currency, the payments are irreversible, and the funds can be recovered only if the seller returns them. This type of digital currency will not have any legal protection, unlike credit or debit cards. That is why it is vital to know what digital currency is and how it works so as not to fall into potential scams and make sure that the seller is reliable.

The Value Changes Constantly

Before acquiring a digital currency such as cryptocurrency, one aspect to consider is that its value can change every hour. Therefore, before spending, it is vital to know that there is no guarantee that it is an investment that will ensure you make lots of money. A clear example was when Elon Musk, CEO of Tesla, announced in a tweet this year that he had bought 1,500 million dollars in bitcoin and planned to accept it as a form of payment. At that moment, the price of the cryptocurrency skyrocketed. But in May, Musk announced again by tweet that he would not accept bitcoins from people who wanted to buy any of his company’s cars. After this announcement, the price plummeted up to 15%.

The abrupt price change is that nobody controls cryptocurrency. Therefore, it goes up and down as it moves in the market. It is one of the arguments used by many banking institutions since there is a possibility that people who deposit their “real money” in a virtual currency that no one backs on may end up losing everything.

The Future of Payments

Despite its variations, this payment system continues to overgrow. Many platforms, companies, and investors are already using it. Such as El Salvador, whose president Nayib Bukele recently proposed the law to convert bitcoin into legal tender. In the country, which was approved and will enter into force in three months, it will make the Central American government the first country to use bitcoin as its official currency.


Digital currency is any currency, money, or money-like asset primarily managed, stored, or exchanged on. Digital computer systems, especially over the internet. Types of digital currencies include cryptocurrency, virtual currency, and central bank digital currency.

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