In 2009, bitcoin was launched, which marked the start of decentralized blockchain-based digital currencies with no central server, and no tangible assets held in reserve. PayPal launched its USD-denominated service in 1998. In 1997, Coca-Cola offered buying from vending machines using mobile payments. e-gold has been referenced to as "digital currency" by both US officials and academia. Į-gold was the first widely used Internet money, introduced in 1996, and grew to several million users before the US Government shut it down in 2008. In 1989, he founded DigiCash, an electronic cash company, in Amsterdam to commercialize the ideas in his research. In 1983, a research paper titled "Blind Signatures for Untraceable Payments" by David Chaum introduced the idea of digital cash. Precursory ideas for digital currencies were presented in electronic payment methods such as the Sabre (travel reservation system). ĭigital money can either be centralized, where there is a central point of control over the money supply (for instance, a bank), or decentralized, where the control over the money supply is predetermined or agreed upon democratically. This type of currency may be used to buy physical goods and services, but may also be restricted to certain communities such as for use inside an online game. Usually not issued by a governmental body, virtual currencies are not considered a legal tender and they enable ownership transfer across governmental borders. This unclassical physical form allows nearly instantaneous transactions over the internet and vastly lowers the cost associated with distributing notes and coins: for example, of the types of money in the UK economy, 3% are notes and coins, and 79% as electronic money (in the form of bank deposits). However, they do have a physical form in an unclassical sense coming from the computer to computer and computer to human interactions and the information and processing power of the servers that store and keep track of money. ĭigital currencies exhibit properties similar to traditional currencies, but generally do not have a classical physical form of fiat currency historically that can be held in the hand, like currencies with printed banknotes or minted coins. Digital currency may be recorded on a distributed database on the internet, a centralized electronic computer database owned by a company or bank, within digital files or even on a stored-value card. Types of digital currencies include cryptocurrency, virtual currency and central bank digital currency. Taxonomy of money, based on "Central bank cryptocurrencies" by Morten Linnemann Bech and Rodney Garrattĭigital currency ( digital money, electronic money or electronic currency) is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet.
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