Digital currency is mainly an advance payment method that ekes out an existence merely in electronic form and is not tangible. Technology including, computers, smartphones, and the internet are involved in transmitting digital currency between entities or users. However, it is similar to physical currencies that allow borderless transfer of digital money to ownership as well as instantaneous transactions. They can be used in making purchase of goods and services, however, there use is restricted to certain online communities, including gaming or social networks.
In Technical Terms
At present, it has restricted user base. Whereas, the regulatory framework and the tax treatments of digital currencies are yet emerging. The organization needed for the sustenance of digital currency is still being determined and developed.
Categories included in digital currencies are cryptocurrencies and virtual currencies. Through digital currencies, payments can directly make between payors and payees, eliminating the need for intermediaries, process steps and costs associated. Also, the advent of digital currencies makes the funds flow more simple and transparent.
Digital currency benefits are many. Few of them - the ability to make payments easily, on time and lower associated transaction costs. On the other hand, its contribution towards organization is in such a manner that completely eliminated the exposure risks by keeping as a transport currency.
Currently, banks are not accepting digital currencies, therefore earning interest on them is next to impossible for individuals or organizations. With its range of advantages, there are also some risks associated with digital currencies like security, currency volatility, and payment beneficiary identification. Compliance with regulations and customer identification along with risk are some areas of uncertainty in digital currencies that limited the acceptance of digital currencies in the payment industry.
In simple words, it’s a payment method between individuals.
Suppose, you live overseas – from there, you have to send some money to your home, also known as remittances; or you have to pay money to your friend who is in a different city, or any other reason, including transferring money. What will you do? A payment transfer system thus comes in handy. There are different ways to proceed, from a ‘money wiring office’, to your laptop. All it needs is a detailed contact information about yourself and about the person you’re sending money: names, cell phone number, email address, bank account number and so on.
As the process seems to be convenient, but there are certain difficulties that tend to emerges out.
When you make a payment or transfer from one bank account to another, it can be pricey - depending on the total amount of money.
Make sure while sending money to another country – perhaps there are different currencies and different exchange rates and it may lead to a dissimilar amount of money being transferred to the receiver.
You may have to wait from several minutes to several days for the transaction to complete.
In order to make successful marketing campaign, there is a general slogan “No matter where you are, you can get your money in an instance”. But do you really agree with this? Sure, you don`t. perhaps, it is uncommon for the people in developed countries, however, it’s quite a hassle in various geographical regions. There are just a few options of getting your money from
Might not! You considered this an issue, but you should be careful with federal legislation, as this form of payment is likely to have tax legislation in some countries.
Currently, high commission fees are included with global currency transfers. Why so?
Here the reason, we start with an instance, globally introduced money transfer systems, including MoneyGram or WU, contains additional transaction costs in order to uphold branches around the world, and cover geographical regions significantly with their services. Also, the transfer bank carries out involve costs of the market sub-allocations for conversion.
As per the study made by World Bank, it states that the average cost of a transfer being about 5.5 percent of the payment amount (for private clients).
On the other hand, Blockchain-based transfer system eliminates the real physical movement of currencies all around the domain, enabling exceptionally favorable outlays for transactions, quickness and extreme reliability of the system’s operation. In contrast, payments via third-party services in the output to the fiat provided by digital currencies exchanges, usually make a difference of at least 1.5-2 percent.
Nowadays, blockchain services are mainly focused on solving issues involved in corporate sectors instead of private individuals. Yet, a simple way for individuals to transfer money in digital currencies has been introduced in projects like Transmission.
Here are the additional benefits.
Costly transactions for clients have been excluded with digital currency payment systems.
A rapid currency deposit and withdrawal can be made with the lowest commission.
Currency exchanges can be done without involving additional costs for conversion.
Immediately money can be transferred, without any delays.