Money in the digital age

Digital money, also known as cryptocurrencies, The aim of digital money is to transform the
way people pay for goods and services in the same way that the internet revolutionized
connectivity and enabled globalization. Digital money provides a single foreign "currency"
that is not regulated by any financial entity. Instead of individual national banks printing,
minting notes and coins, machines are used to produce units of digital currency.

Bitcoin introduced (October 2008) -> How To Value Cryptocurrency

T he currency of the future,

cryptocurrencies, is a digital medium
of trade created by teams of experts
known as "miners." Miners use
advanced hardware to process
encrypted transactions by solving
complicated mathematical puzzles
that encrypt electronic currency.
Individuals can share
cryptocurrencies, and
cryptocurrencies can be bought and
sold through online exchanges.
Cryptocurrencies can also be used for
new methods of exchange such as
peer-to-peer lending and
crowdfunding.
Timeline of digital money
Many cryptocurrencies have been
launched since the technology for
digital money was mastered, however
Bitcoin remains the biggest. Now even
central banks have begun
investigating the potential of digital
money.
First Bitcoin transaction (May 2010)
-> Ripple lauched (Septemper 2013)
-> Highest value of Bitcoin to date (29
November 2013)
Working Principle
There are two main features of a
cryptocurrency. The first is that it only
occurs in the form of simulated
"coins." Rather than being created by
a national central bank, it is created
digitally by teams of technicians
known as "miners," who use
specialized computer hardware.
Encrypted in constantly changing
digital codes to reduce the risk of
counterfeiting, cryptocurrency can be
easily transferred online between
individuals independently of financial
or government institutions. The
second feature is that the total amount
of a cryptocurrency is capped. Each
“coin” created by a “miner” is listed on
a virtual public ledger called
a“blockchain”.
The total worth of all coins and their
daily trading volume : A high total
worth can indicate a high value per
“coin”, or it can simply mean that
there are a lot of coins in circulation.
The daily trading volume is an
indicator of the number of coins that
change hands in a day. It is best to
review the two statistics together. A
cryptocurrency that has a very
substantial trading volume as well as a
high market capitalization is likely to
have a high value.
The means used to secure and verify
transfers : Different cryptocurrencies
have varying ways of verifying and
securing transactions. The systems
rely on complex mathematical
problems, and their effectiveness is
based on the time a transaction takes
and its vulnerability to attack. Most
currencies use one of two systems,
Proof of Work (bitcoin) or Proof of
Stake, or a combination of both, to
ensure the best network security.

Compare conventional currency and cryptocurrency

Traditional currency
Make: Central banks print money that is then releasd
into the economy largely by retail banks in the form of
loans.
Control: Retail banks continually monitor transactions
for signs of suspicious activity.
Value: Determined by economic factors and the amount
of money in circulation. Central banks can devalue a
currency by printing more of it.
Cryptocurrency
Make: “Miners” create virtual “coins” using special
hardware. The coins are then registered on an online
public ledger.
Control: Secure encryption is built in to the code of
each virtual coin. Continually changing complex
mathematical puzzles prevents counterfeiting.
Value: Cryptocurrencies become more valuable when
they are easier to use, transaction time is faster and
more secure, and the number of retailers using them
rises.