TechKNOW Tomorrow – The Beginning of Digital Currency

Image by Bermix Studio via Unsplash.

Last year, Facebook revealed their plans to release a digital currency called Libra. Now that it’s 2021, that currency is set be released at some point this year.

That announcement had some ramifications, unfortunately. Other countries such as China have accelerated their work on their own digital currencies, a race to be the first to release what many expect to be a revolutionary technology.

When a digital currency is released here in North America, physical currencies – bills and change – will slowly be phased out like the penny was many years ago. The U.S. already has a disproportionate amount of power over the global economy. With the removal of physical currency, several issues will inevitably arise.

What About Cryptocurrency?

An argument might be made that digital currencies already exist, so this might not seem like a big deal at all. That’s not exactly true. A digital currency is not the same thing as virtual currency or cryptocurrency. Virtual currency “is a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money”. Virtual currencies have no physical means, making them difficult to quantify.

This differs from banks, debit, or credit in that the money you spend has something represent it in the real world. When you spend money on your credit card, for instance, you have to pay that back (with interest). A dollar in your bank account shares the exact same value as a physical dollar.

This is not true for cryptocurrencies. Cryptocurrencies like Bitcoin fluctuate dramatically in terms of value, meaning the value they hold isn’t based on the value of a physical dollar. A Bitcoin can be worth thousands of dollars one day… and then next to nothing the next.

Image by Kyle Wiseman via Google.

On top of this, digital currency “is regulated in a centralized location, like a bank. Cryptocurrencies … are governed by the majority of the community”.

The information behind transactions are kept private with digital currencies or cash. Think about it – no one knows where the cash in your hand has been spent in the past. With cryptocurrencies, none of this information is hidden. Anyone can see every transaction made or received.

There’s also less safety involved with these forms of currency. If you have problems with a seller, who are you going to contact to deal with the issue? There’s little chance of getting your money back.

As long as cryptocurrencies are managed by everyone, there will never be a set value and your money will never truly be secure.

Issues with Digital Currencies

Okay, so what’s the big deal with digital currencies, then?, you might be thinking. If they’re regulated and private, doesn’t that mean they’re still safe to use to exchange goods and services? Not quite.

One of the main concerns with digital currencies is that they require an intermediary to perform transactions. This means that your transactions will be even less private than they are through debit or credit. Every transaction you make will be traceable, meaning economic privacy will be next to impossible.

Another issue is in control and the issue of business over government. If a digital currency is launched by Facebook or a similar tech company, a company entirely focused on commercial interests (earning money), elected governments could face instability and drastic changes in policy.

If a currency is controlled by a company instead of the government, how do we know that the various programs created will be in the interests of the people, and not in the interests of shareholders? Free education and hospital visits are things we take for granted.

Without government control over the currency, we could start seeing basic human rights becoming monopolized into expensive services. We’ve already experienced this in university and prescription costs. Privatized control of these industries could potentially lead to increased social inequalities.

Of course, it could be many years before we see physical currencies phased out of existence. For now, we can only speculate on the future of the economy.

. . .

At techKNOWtutors, we realize that adapting to technology isn’t easy. Although most services have closed, we remain open – digitally – to answer your internet-related questions. If you need help with improving your digital literacy, send us an email at techknowtutors@cscnl.ca or join our Facebook group and send us a message.

Better yet, sign up for one of our online classes that we offer for FREE every week! Until then, stay in the techKNOW.

3 Comments

  1. I think Digital and Virtual currencies will be in a future similar to what the stock markets are today. Anyone will be able to invest and play, dreaming of becoming rich in the blink of an eye. It is the excitement of winning, like the feeling we get when going to Casinos. I don’t think Governments will ever allow the power of their physical currencies disappear. However, they might create their own Digital currencies more stable and more reliable in the future than stock markets and exchange rates. Maybe one day there will be one currency for the whole planet. I think that would be good as world economies would be more stable. Like the stability and power the European Union is achieving. That would be the end of 3rd world countries thus hunger. But greed and selfishness must disappear in order to accomplish that… Meanwhile, let’s keep on dreaming of a better future for all.
    Great article as usual Kyle Wiseman and TechKNOWtutors.

    Liked by 1 person

    1. Interesting perspective, Sergio! I think governments are trying to phase out cash entirely, but this is a process that will take many years. Some capitalist interests unfortunately dominate the global market with little leeway available. But yes, we can at least hope for a future with less inequalities in the world!

      Like

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