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Get to know the digital currency 

    Know the currency of the future - digital currency -: its definition, its origin, and its characteristics:

What is digital currency?

    Digital currency is any currency available exclusively in electronic form where electronic versions of the currency dominate financial systems in most countries in the United States, for example, the physical currency traded in the United States is only about a tenth of the total cash supply; the rest is kept in different bank deposits in electronic form.

    What distinguishes digital currency from the electronic currency currently found in most Americans' bank accounts is that it never takes physical form, at the moment, you can go to the ATM and convert the electronic record of your currency's holdings into actual dollars however, the digital currency never takes a physical form, always stays on the computer network and is exchanged via digital means.

    For example, instead of using invoices in actual dollars, you can make purchases by converting digital currency to retailers using your mobile device functionally, this may not differ from the way you currently handle your money using payment apps such as Venmo, PayPal, or Apple Pay, where after the successful launch of decentralized cryptocurrencies such as Bitcoin and Ethereum, which store value but are not managed by any central authorities, governments and central banks around the world are looking for the possibility of creating their own digital currencies, generally known as central bank digital currencies.

What is the digital currency of the Central Bank (CBDC)?

    CBDC is a digital currency issued and supervised by the country's central bank, such as Bitcoin, but if Bitcoin is managed by the Federal Reserve and fully supported by the U.S. government, while no national central bank has launched its own digital currency, at least 80% of central banks are currently looking for this technology.

How does CBD work?

    While U.S. central bank (CBDC) currencies may be out of reach right now, Jim, senior vice president at the Federal Reserve Bank of Boston, noted how the central bank's digital currency or a digital dollar could work and said that digital central bank currencies would work similarly to actual cash" if I gave you CBDC, it would be as if I was handing you money, like a $100 bill you'd have that money in your account.

    This is a major difference against other forms of electronic payment today, such as the transfer of ACH or PayPal if you send you money through PayPal, this is just a promise that the money will come, the balance of funds may appear but the money has not been actually transferred between banks yet" and because of that, the transactions are not irrevocable and the other party can undo them; there are 60 days in which the transfer of ACH can be canceled with transfers through CBDC, the funds will be sent on Immediately, the other party cannot cancel anymore.

    Another key advantage of the central bank's digital currency is that it can be considered legal tender... This means that all economic actors must accept them for any legal purposes "you can pay your taxes or pay money to anyone you owe, such as the bank or individuals, and are legally obliged to take them" this is unlike other cryptocurrencies, which are not considered legal tender in the United States. Certain vendors accept cryptocurrencies directly, so people may need to convert their cryptocurrency into U.S. dollars before making most transactions when using encryption as a payment method, because it creates a taxable event, which means you may owe capital gains taxes every time you buy something using Bitcoin or Ether, in addition to any sales taxes with CBDC, you will only owe valid sales taxes just as you do use the physical currency.

The genesis of the digital currency

    In 1983, a research paper by David Chum presented the idea of digital money in 1989, founding DigiCash, an electronic cash company, in Amsterdam to market the ideas contained in his research, filed for bankruptcy in 1998.

    Electronic gold was the first widely used Internet money, introduced in 1996, and grew to several million users before it was closed by the United States Government in 2008. Electronic gold was referred to as a "digital currency" by U.S. officials and academics. In 1997, Coca-Cola offered to buy from vending machines using mobile phone payments and launched PayPal its U.S. dollar-denominated service 1998, In 2009, bitcoin, which was the beginning of decentralized Blockchain-based digital currencies without a central server, was launched, and there are no concrete assets held in reserve, Blockchain-based cryptocurrencies, also known as cryptocurrencies, proved resistant to the government's attempt to regulate them, because there was no central organization or person with the ability to turn them off.

    The origins of cryptocurrencies date back to the 1990s and other well-known cryptocurrency services Liberty Reserve, founded in 2006. Allows users to transfer dollars or euros to Liberty Reserve Dollar or Euros, and freely exchange them with each other for a 1% fee many digital currency operations are known for their use in Ponzi schemes and money laundering and have been sued by the U.S. government for operating without MSB licenses.  Q or QQ currencies were used as a kind of commodity-based cryptocurrency on Tencent QQ's messaging platform and emerged in early 2005, Q currencies were very effective in China where they were said to have had a destabilizing effect on the Chinese yuan currency due to speculation, the recent interest in cryptocurrencies led to renewed interest in digital currencies, as bitcoin was introduced in 2008 to become the most widely used and accepted digital currency.

How did cryptocurrencies work all over the world?

    Despite the potential benefits of the U.S. CBD, it's still a strange concept right now around the world, there are other countries a little further along with cryptocurrencies such as the Bahamas Sand Dollar project currently being produced, and the Chinese Digital Yuan, one of the largest digital currency programs for central banks that launched a pilot project in 2014.

Benefits of digital currency

     - Faster payments using digital currency, you can complete payments much faster than current means, such as ACH or bank transfers, which may take days for financial institutions to confirm a transaction.

     - International transfers are less expensive because international currency transactions are expensive; individuals are charged a high fee for transferring funds from one country to another, especially when it comes to currency transfers. Andrew Kegwell, CEO of Tokens.com, said: "Digital assets disrupt this marketing by making it faster and less expensive and transactions work at the same speed 24 hours a day, seven days a week."

     - Support for those who do not deal with banks and who are underbanked more than 7 million American families who do not have a bank account, according to the Federal Deposit Insurance Corporation (FDIC) end up paying expensive fees to pay their salaries and send payments to others through remittances or transfers, if the state launches a digital currency for the central bank, individuals who do not have bank accounts can access their money and pay their bills without additional fees.

      - The government has developed a more efficient central bank digital currency, which can send payments such as tax refunds, child subsidies, and food stamps to people immediately, instead of trying to mail them a check or discover prepaid debit cards.

How will digital currency affect you?

    If the United States adopts a digital currency, it will act as an alternative to cash but will also have the built-in advantage of rapid money transfer because it is electronic and Cunha has some ideas about what consumers will look like. "Our assumption is that it will be free or semi-free, such as money other private sector actors may innovate further and may add fees, but this should be further clarified" Although the digital currency will be electronic, it still needs to be available like cash Cunha said: "Anyone should be able to use it, not just those with the latest smartphones."

     Referring to chip-based cards, POS systems, and web accounts as alternative ways to access CBDC, he also believes that there is a need to develop a way to deal with transactions offline so that two people can exchange the central bank's digital currency even if they are not connected to wi-fi or the Internet.

     There is a lot to be done and a lot of industrial input is required, as Cunha admits, but it may be worth investing and said: "Although no decision has been made to bypass this research, I really think that CBD should be fully investigated and has great potential."

Examples of digital money

    The most common form of digital money is money held by banks and central government deposits that enterprises have a certain level of capital to cope with economic pressures; however, the funds do not remain in a secure physical place and instead are deposited electronically in the form of digital money. Banks and central governments deal with transactions, including millions or billions of currencies, but are free of the use of physical cash, and another prominent form of digital money is cryptocurrency. As we have already explained, it is a form of digital money that exists through the blockchain network that includes some forms of cryptocurrencies: Bitcoin, Ethereum, Ripple, and Litecoin.

Digital currency defects

    There are too many currencies to browse at the moment, the current popularity of cryptocurrencies is actually a downside, there are a lot of cryptocurrencies created across different blockchains and all of which have their own limitations, Tesler said: It will take time to identify cryptocurrencies that may be suitable for certain use cases, including whether some are designed to expand the scope of mass adoption.

     - Makes an effort to learn how to use them, where cryptocurrencies require user-made work to learn how to perform basic tasks, such as how to open a digital wallet and securely store digital assets for cryptocurrencies to be adopted more widely, the system must become simpler.

     - Blockchain transactions can be expensive using blockchain cryptocurrencies, where computers must solve complex equations to verify and record transactions, this requires a great deal of electricity and increases in cost due to the presence of more transactions and these probably do not exist for digital currencies of the central bank, however, where they are likely to be controlled by the central bank and there will be no need for complex consensus processes.

     - Large fluctuations in cryptocurrency prices, cryptocurrency prices, and their value can suddenly change as this is why companies are reluctant to use them as a means of exchange. "As a company, do I want to accept something volatile? What if I keep bitcoin for a week and lose 20% of its value? "With CBDC, the value is more stable, such as paper currency, and cannot fluctuate like this, it will take time to develop a digital currency for the central bank and tax dollars and the digital currency of the U.S. Central Bank (CBDC) remains hypothetical if the government decides to create one, there will be costs associated with its development.

The dangers of digital money

    Payment fraud is one of the great risks that can be attributed to the increasing use of digital funds, namely payment fraud. Payment fraud can be committed in many forms in general, it includes fraudulent or unauthorized transactions by an internet criminal and includes some common forms of payment fraud:

• Fraudulent payments.
• Illegal payments.
• Manipulation inside.
• Data theft.
• Violation of the embargo and sanctions.

Conclusion:

     Since the money is not actually transferred, it is impossible to know who is on the other side of the transaction. It provides opportunities for cybercriminals to access sensitive information or trick people through digital money, although payment security is increasing, the complexity that cybercriminals commit in frauds is also getting more complicated, payment fraud activity continues to rise, and shows no signs of declining.

    As contemporary cybercriminals become more literal than ever, constantly exploiting new vulnerabilities and devising different ways to manipulate digital money, fraudsters are too persistent in their efforts to attack payment systems. If they face challenges in a certain way, they will only shift their focus and turn it into alternative payment methods.