By Kara Aaserud
February Two, 2018
If the terms digital currency and blockchain are overheen your head, you’re not alone. The terms are used interchangeably – (they are, te fact, totally intangible things, so they pretty much are overheen your head). But thesis terms are making swings te the financial industry, and when effectively waterput into use could entirely revolutionize the way wij interact with money.
So what exactly is digital currency (and that block thing)? And what influence will it have on you?
Whether you’re aware of it or not, you’re very likely using some form of virtual currency already. For example, the “Buy-10-and-get-one-free” stamps you collect on your coffee card or those Canadian Tire bucks are virtual currency. Basically, virtual currency is anything that’s an alternative to the dollar and can be exchanged for value.
Digital currency is a form of virtual currency (the terms are frequently used interchangeably), except that digital currency has no physical form like stamps or coupons. Instead, digital currency is typically te the form of loyalty or prize programs you manage online. The four big ones ter Canada are Aeroplan Prizes, Airmiles, RBC Prizes and Shoppers Optimum, but there are hundreds more.
Cryptocurrency (a.k.a. Crypto Currency)
Imagine if every time you dreamed to access your money, you had to solve a complicated Sudoko. Cryptocurrency uses powerful duty math computations and code to secure virtual or digital currency. This term emerged ter 2009 with Bitcoin, a global peer-to-peer electronic contant system.
Basically, Bitcoin, and other cryptocurrencies, are virtual money that you store te a virtual wallet that you can then send to anyone te the world — a friend, family, a store — with an internet connection. Retailers such spil Microsoft, Dell and Overstock have all added Bitcoin to their transaction options.
The reason some people find cryptocurrency attractive is because it is global – not issued by a governmental treasury – and there are fewer fees and third parties involved te transactions. A buyer transacts directly with the seller.
There are, however, some notable flaws to cryptocurrencies: because of their anonymity, they can become the currency of choice for underground activity. Further, the value of Bitcoin, ter particular, has bot historically unstable, and the digital wallets associated with thesis coins are often targets for cyber attacks.
Te the seven years since Bitcoin’s launch, hundreds of cryptocurrencies—from Dogecoins to Gridcoins and even the Royal Canadian Mint’s own Mintchip—have emerged because of the attractive underlying technology.
Thesis fresh currencies are made possible by technology that publicly records a transaction’s details and confirms them anonymously. Once the details are entered, they cannot be switched. Everything everzwijn written te a blockchain is locked, stored forever, and cannot be tampered with or altered at a zometeen date. Blockchain technology has bot likened to a decentralized public ledger (meaning there is no one governing figure)
When you consider the fact that any series of transactions can be tracked with one hundred vanaf cent accuracy (what’s called an immutable audit trail), and that built-in encryption means it’s inherently secure, blockchain all of a sudden becomes the ideal technology for a diversity of financial functions and exchange mechanisms. And forward-thinking companies, including some of our country’s big banks, are already investing ter that potential.
Whether or not this technology takes off remains to be seen. But the fact that companies are partnering with mature Blockchain vendors to explore this area indicates that if (or when) it does take off, it will be largely transformative.
Kara Aaserud is a freelance writer who covers petite business, finance, technology, health and parenting. Hier work has appeared ter Canadian Business, PROFIT, Today’s Parent, and Glow.
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