Digital Currencies

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Posted by The Savvy Retiree on January 3, 2016 in Money Saving Strategies, Personal Finances

For hundreds and hundreds of years, American citizens – and citizens of almost every other country in the world – have been able to pay for products, services and other entities of value with what’s known as “fiat” currency.

What’s “fiat” currency?

In a nutshell, it’s money declared by a government to be legal tender.

Just think of the physical dollars and cents you have in your wallet… or the money you have stored in your bank’s savings and checking account.

You know… U.S. dollars. Euros. Pounds. Yen.

  • All are “fiat” currencies…
  • All are backed by their respective governments.
  • All include tangible money (i.e. paper bills and coins)…
  • And all are recognized the world over…

But in the last decade, a “new kid on the block” has emerged in the world of currencies.

It’s a new – and somewhat controversial – type of currency that’s completely changing the way many forward-thinking individuals, small businesses and even corporations spend, receive, save and invest money.

I’m talking about digital currencies.

Today, thanks to the advent of the internet, digital currencies can now be used in much the same way we’ve used fiat currencies.

So… what, exactly, is “digital” currency?

According to Wikipedia, digital currency is “an internet-based medium of exchange distinct from physical (such as banknotes or coins) that exhibits properties similar to physical currencies, but allows for instantaneous transactions and borderless transfer-of-ownership.”

And it’s a type of currency that just about anybody – including you – can use and potentially benefit from.

The thing is… we’re still in the early stages of the “digital currency era.” And it already has its fair share of detractors. On top of all that, nobody really knows for sure what the future holds for digital currencies.

But if one thing’s for sure, based on the meteoric rise of digital currencies like Bitcoin, digital currencies are definitely worth a close look if you’re interested in receiving, spending, storing and investing money free from government and corporate interests.

 

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