The drama of economics, markets, and the exchange of commodities in human civilization is continuing with the tale of digital currencies. We can draw the conclusion that public-key cryptography and digital signatures enable digital currency by studying the development of the internet. Digital currency can be either centrally controlled (with a single point of control for the money supply) or decentralised (with consensus regulation and user network verification of supply control). The institution of 'e-money' is the centralised form of digital currency that is currently available. With the central bank digital currency (CBDC) starting to emerge, national banks will soon use the centralised digital currency as their primary tool, propelled by technological advancements.

Digital money

E-money

Electronic money, or e-money, is described by the Bank for International Settlements as 'stored value or prepaid payment mechanisms for executing payments via point-of-sale terminals, direct transfers between two devices, or even open computer networks such as the internet.' A claim that is floating and unconnected to any specific account is called electronic money. E-money examples include bank deposits, electronic financial transfers, and payment processors. Additionally, e-money can be kept in online payment accounts or stored on mobile devices for use on such devices. E-quick money's adoption has prompted regulatory actions from the government. One of the first countries to regulate e-money was Hong Kong, which only permitted banks with licences to issue stored-value cards.

Virtual money

Regulators began referring to the decentralised forms of virtual currency that were emerging online. Virtual currencies are a sort of unregulated, digital money that is issued and typically controlled by its developers, utilised, and accepted among the members of a specific virtual community, according to the definition provided by the European Central Bank in 2012. Virtual currencies are defined by the European Banking Authority as 'a digital representation of value that is not issued by a central bank or a public authority, and is not necessarily tied to a fiat currency, but is accepted as payment by natural or legal persons and can be transferred, stored, or exchanged electronically' in 2014.

Stablecoins

Diem Association and Libra (later Novi) project from Meta were among the most notable initiatives to create a worldwide stablecoin. When a cross-border global digital currency was announced, US policymakers and financial institutions were concerned that it would affect US monetary policy and closely examined the initiative. In order to avoid violating tight banking laws, US officials forbade Meta from issuing its own local coinage.

Cryptocurrency

Regulation of markets and protection of financial actors' privacy are essential in the realm of finance. The safeguards of these standards are provided by honest and helpful financial intermediaries. These regulatory bodies are often state-level ones. The digital age has brought about a change, though. A new approach to networking and collaborating in governance is emerging. Due to the ease with which digital data can be duplicated, double-spending is a potential issue that is exclusive to the digital environment. The financial sector required a system that would allow for the sending of digital data and the receipt of a single copy by the recipient. 

This problem of duplicate spending was finally resolved by the first fully working cryptocurrency, bitcoin.The cryptographic hashing function, which gives cryptocurrency its name, acts as evidence for the chronology of transactions. Despite having features that are similar to those of physical money, this internet-based exchange medium enables immediate transactions and the transfer of ownership across international boundaries. 

Through the use of open-source software, digital natives in a vibrant atmosphere were inspired to establish a global online payment system. Rapid growth in bitcoin trading was followed by a rise in interest among commercial users in blockchain technology. The market for the exchange and custody of such assets began to grow quickly as Bitcoin and other cryptocurrencies, such as stablecoins, began to acquire appeal.

Key issues

Cryptocurrency has a number of comparative advantages over more established online payment methods. It may sound like a future concept to link to a single global financial system from one source (the internet), but with digital currencies, it is not that far off. 

The use of cryptocurrency for unlawful goods and services, fraud, and money laundering is fraught with cautions, according to a number of sources. Because virtual currencies, like Monero, may be used anonymously, there is a higher chance that they will be abused.