Digital currencies, which have become the center of attention of the world in recent days, indicate that a world where we do not have wallets or go to ATMs is very close.
Thanks to digital money, it is now possible to carry out transactions without carrying money in our pocket in the electronic world. Digital money is not actually a new concept. 63 countries including Turkey's central bank has done studies on this topic in 2019, but the idea is the first time China was able to move in real life.
China has been doing important work on digital money since 2014. Now it has launched the use of the Centralized Bank Digital Currency, or CBDC, in four cities of China (Shenzhen, Suzhou, Chengdu and Xiong'an) and is in talks with private companies to further expand the use of digital money. Didi Chuxing, China's largest taxi program (China's Uber), and Meituan Dianping, the catering company, are among these companies. Among the decisions taken regarding the widespread use of digital money is the future payment of civil servant salaries in digital money. Therefore, digital money is starting to take place in our lives.
Countries around the world are researching and developing digital currencies. In other words, many countries have started work to digitize their paper money and the economy. According to the latest research by The Block, at least 18 countries are working on digital money.
Source:
https://coingeek.com/central-bank-digital-currencies-what-are-the-benefits-of-digital-money/ (Access Date: 30.09.2020)
On the other hand, it is also a matter of concern whether the digital currency will actually be successful in the future. So what are the advantages of digital money? Why was digital money needed when there was classic money that we are used to?
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One of the main advantages of digital money is that all information in the transaction is limited by the amount, sender and destination. Therefore, the privacy of customers is protected as personal data are not included.
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Provides the advantage of high level accessibility. It is sufficient to have an internet connection to use digital money.
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It has the advantage of international use.
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It increases the trust of customers for businesses. Because customers can safely shop with a temporary encrypted code, not a credit card number to pay.
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Plays an important role for the state in strengthening the hand of the state in combating the informal economy.
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It has an efficiency effect. When you digitalize paper money, you no longer have to reach your cash or coins with your wallet to pay. Instead, a tap of a button is all it takes for the consumer to merchant transaction. Beyond ease of use and speed, digital money is much more transparent than paper money and therefore can be a significant advantage for businesses
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Digital money can be easily transferred. It provides ease of transaction.
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In terms of hygiene, the risk of carrying today's plague coronavirus will be reduced with digital money, so it provides a significant advantage in terms of health.
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Digital currencies have dates. Thus, it becomes possible to save money.
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Provides high processing speed. The advantage of shortening the time of payment, purchase and sale transactions and ease of transaction will be provided.
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Unlike crypto currencies, digital coins are supported by central banks. Therefore, they are reliable.
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Transfers made by international power and terrorist organizations in large amounts can be blocked by digital money. It provides easy access to criminals by tracking the money.
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Security risk is less than regular coins
In summary, although we approach digital money with hesitation as in everything new, digital money has many advantages. In particular, the possibility of classical currencies to carry coronavirus accelerates the transition to digital money. In addition to this, with digital money, which has many important advantages such as security, ease of transaction, informal economy and prevention of corruption, the importance of classical money is gradually decreasing in our electronic world and the coins and paper money we use now seem to become history.
Istanbul Gelişim University Department of Economics and Finance
Research Assistant Burçin ÇAKIR
