One day I was reading a newspaper , what I saw that the whole newspaper was carrying a articles about cryptocurrency , bitcoin etc. And as I opened the you tube , there also I saw the add of digital currency some are saying that , ” starts investing in cryptocurrency and digital currency ” , ” it will make you billionaire in future ” a lots of add like these caught my attention . There is also a assumption that in future no one will use rupees , everyone will use digital currency .
Before going further , let’s first have a look on past . We all are talking about future , that we will use digital currency in future . In present we all are using paper currency but what about past ? Did we use paper currency in the past or did everything was free ? How they bought and sold goods ? What was there medium of exchange ? As a human nature , there may be a lot of questions roaming in one’s mind about currency used in past .
Cut to the chase and have look at every aspects one by one . In past , our ancestors used to barter system i.e. the system which is based on double coincidence of wants . Look at the below example , suppose Ram needs a wheat for cooking and he have a pair of shoes with him . What will he do ? That time there were no rupees . Ram will find a guy who have wheat and ready to change that wheat with that pair of shoes . These nothing but a double coincidence of wants theory and we called it a barter system . But it was not always possible for a person to find a another person who is ready to do double coincidence of wants and also one can exchange a pen with a good too , such a kind of unequal exchanged leads to the failure of barter system .
To avoid such a situation , World moved to the new system i.e. paper based currency . After barter system , paper currency was accepted by all Economies . All over the world , currencies like simple Euros , dollar or rupees etc. are in remuneration i.e. nothing but a paper currency because they all are made up of paper . According to the economist currency means ” Money is what , money does ”
Let’s Understand currency or a paper currency in a nutshell . In a barter system , double coincidence of wants depend upon the factors like human needs and utility . chances of occurring double coincidence of wants is less . To avoid these , people started using paper currency . For example , just for sake of simplicity assume that in an world there is only one country whose name is Nanaland and there were only there persons ; A , B and C . A have a grains shop and he wants to buy a shirt , where as B have a book shop and he wants to buy a grain and at the end C is a student and he wants to buy a books and he sells a shirt.
From above example , you can see even in a Single country’s economy people have different utility and needs where the chances of double coincidence of wants is less . So here in Nanaland’s economy , government issued a currency assumed a rupees in a local language money . A goes to the C from him , A bought a shirt of prize ₹ 100/- and gave him a ₹ 100/-note . C take that ₹ 100/-note and go to the B from him , B bought a book of prize ₹ 60/- . Now , B has a ₹ 60/- . From ₹ 60/- rupee note B bought grains from A’ s shop . That’s how paper currency works in a whole world . In Nanaland’s economy , the medium of exchange is paper currency or money or rupees.
Paper currency overcomes the cons of the barter system and it becomes easy for everyone to use . Different nations have different paper currency . Basic differences are easily appeared . They all are different from each other on the basis of colour , size and even in broadness . Let’s take a example of two country’s currency , India uses rupees where the National father’s means MATHAMA GANDHI’S picture is depicted on a currency and with there specific value . Where as in us dollar the picture of GEORGE WASHINGTON and the size of dollars is smaller than that of rupees. One can’t print the currency . Central bank of every nation have a right to print the currency . In a case of India , RBI issues the currency whereas coins is minted by union government .
After issuances of paper currency life becomes easy but always remember my friend’s each and every things in these world is having pros and cons . There is no such a things on my mother earth which is perfect . Paper currency is also having some cons . As it is owned by government , no one have a right to print it which is somewhere right . Here , is also a little bit threat of black marketing . One with a keen observation can easily identified counterfeit . Here , is a possibility of a robbery like it’s dangerous to carry a big Amount . It’s very unsafe to carry , save and maintain the paper currency . One of the big disadvantages is it is affected by demonetisation and during the pandemic , we avoid to use the things touch by others but what about currency which is tangible and used by everyone which can easily spread the disease .
In such a case , there is a need of a currency which can overcome the drawback of the paper currency . Well , the main drawback is that it shouldn’t be tangible , which is overcome by only the digital currency . But here a lot of people gets confused between Digital currency and Digital transition . Digital transition is the system in which one digitally use the paper currency . For example , if a person transferring a money to the another person digitally . And that another person withdraw money from bank in the form of paper currency which is ultimately a same thing but only difference is the use of digital technology . In a case of digital currency , there is no use of paper currency neither directly nor indirectly .
Digital currency also known as digital money, electronic money or electronic currency . Like a paper currency can be stored , maintained and exchanged similarly a digitally currency too do all these activities but here all these activity will be done over a internet .
In 1983, a research paper by David Chaum introduced the idea of digital cashare built using the foundational Blockchain protocol. Like paper currency printed and coins are minted , similarly Digital currency is made up of blockchain software which is nothing but a specific type of database . Here is advantage that blockchain records data or information in a way that makes it difficult or impossible to change . So , nobody can hack or cheat where as in a case of paper currency hackers can crack the code and can loot the bank .
These blockchain contains series of block and each blockchain contains a number of transactions, and every time a new transaction occurs on the blockchain, The series of blockchain linked to each other by cryptography or cryptology i.e. it is like a end-to-end encrypted system in WhatsApp . It’s work is to protect and secure communication from the third party .
There a lot of type of digital currency like cryptocurrency , cardano , DASH , EOS , IOTA etc. But the main types are cryptocurrency , virtual currency and central bank digital currency .
When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control . There are also different types of cryptocurrency like Bitcoin , Litecoin , ethereum etc. By knowing it’s pros , whole world is moving towards Digital currency . But as I already mentioned , each and every thing on the mother earth is having a cons and pros . Likewise , here too . In a case of paper currency , each paper is having fixed value but in a case of digital currency it’s not applicable . For example , to purchase a pen one have to give a ₹ 10/- i.e. 10 rupee note is defining the value of that pen . But one can’t say that 2 bitcoin is equal to the value of 1 coin . These is like calculating the satisfaction of human in terms of units .
The value of any note for example , 100 rupee note can’t be increase or decrease . One can’t call the 100 rupee note a 200 rupee after on the basis of demand . But in a digital currency , demand and supply rule is applied . As the demand of digital currency increases it’s value will definitely increase .
In Digital currency , there is chances of increasing illicit activities but in case of paper currency it’s less. In digital it’s impossible to track the illicit activities .
In World everyone’s eye is on the digital currency from peasant to president , from teachers to stock marketers , from children to olds . New technology i.e. digital currency is at the door . New era will be the era of technology , what will happen no one can surely say , only can predict . Digital currency will accepted by world or not . But the wave of technology is saying that new generation will use the digital currency .
Everything is having pros and cons weather paper currency or digital currency. Today all are using paper currency , to make it much easier and better , everyone is eagerly waiting for digital currency but it also have cons .
Let use and handle it wisely and safely .
Human dignity and privacy is prior than any kind of great technology .
