What Is Understood By Currency
Currency is typically what is used as money in a place or a particular country. We have coins like metal, bank paper notes, drawn checks on bank account is also a modern form of currency, money orders as well as electronic money otherwise know as digital cash these are all types of currencies.
When we talk about currency it is money that has been legally designated by the authority of a place as a means of exchange, in other places too once an object is perceived to have value and can be exchanged for other objects it could also be seen as currency.
Many countries of the world today have their currency peculiar to them, in Nigeria for instance our local currency is naira, south Africa local currency is rand, while in Europe most of the countries there uses euro as their standard currency, America uses dollar that's USD while Japan uses yen, Britain uses GBP that's the British pound and so on.
Currency in itself it's nothing, it's just the value people place on it that makes it valuable, currency could be in the form of paper with a seeming historic image on it, shell, metal coin. Money/currency is a medium of exchange, a unit of measurement and a storehouse for wealth and it allows people to trade goods and services directly or indirectly. It is valuable because we all knows it's acceptable as a form of payment.
Physical Currency
Well as the name implies it's simply means currencies or form of money that is physical, which is visible in the outside world that is money we can touch and hold and feel as the case is and use to put in our physical wallet when we are traveling or to purchase goods and services at will, yes this physical money or currencies could be the printed paper money that is common to us today or the metal coin or our cowries which at one point could was used as currency. To me the point here is any form of money we can hold with our hands and use it as bargaining power when making purchase(goods & services) that's physical currency.
Advantages Of Paper Money/Physical Currency
1.) Easily Transportable: It has less volume and more value
2.) Elastic Form Of Money: It can be easily printed as such quantity can easily be increased when required by the economy
3.) Economical: Little cost of paper and ink is actually incurred to print it
4.) Save Precious Metal: Precious metal are being saved and preserved by using paper money
Disadvantages Of Paper Money/Physical Currency
1). Danger Of Over Issue: Well printing paper money is very easy which makes it very possible as we have seen in most cases as government often over issue this currencies causing it to flood with the increase in supply which often cause inflation.
2). Lack Of Durability: Well some forms of physical money are not durable, while metallic coin are somewhat durable paper money is not durable at all.
3). Useful In One Country: This is a legal tender which can only be used in a country where it is issued.
4). Demonetizations Of Money: In the case of fake money or when there is a change in national currency and the old currency is to be replaced by a new one it is often associated with cost since money most have been spent in printing the previous one in circulation
Digital Currency
This is the form of money that is only readily available in an electronic form. They do not have physical form unlike the currencies with printed bank notes or minted coins. Now since this form of currency does not have an physical form at all it makes it possible for an instantaneous transactions over the internet and also remove the cost often associated with distributing notes and coins.
Types Of Digital Currency
- Cryptocurrency
- Virtual Currency
- Central Bank Digital Currency (CBDC)
Advantage Of Digital Currency
1). Faster transactions: With digital currency one can easily make transaction at once without any need for middle man or intermediary unlike with the other form of currency when we make a high volume purchase we don't need to get the permission of the bank before signing off the money but instead we could carry out transactions almost instantaneously.
2). Fraud protection: With digital currency we can easily send out funds to anyone without giving out any personal information like our credit card where there is a risk of potential information being stolen.
3). Easy accessibility: One of the best thing about digital currency is that it is accessible to everyone, it is estimated that 2 billion people across the globe have access to the internet either with their phone or computer which shows that indeed this form of currency can be assessed by anyone at all from any part of the world as long as they have internet connection.
4). Constant Payment tracking: With digital currency we can easily track our money any second of the day without wondering where it might be.
Disadvantages Of Digital Currency
1). Security Issues: Since it's operated via the internet and it's online that's means it is can be liable to hackers attempt
2). Accessibility To Everyone: This is both an advantage and disadvantage, as much as it is nice that we can all gain access to it this means that criminals could also gain access to it and use it to fund criminal activities or some others for nefarious purpose which is a notable drawback.
Conclusion
Indeed currency's do come in various forms today but ofcourse we are most familiar with the physical form of money and I do believe that with that digital currency will completely take over and we won't have to be carrying cash up and down, transactions will be done easily through our devices, many countries today are adopting Bitcoin as legal tender while those who oppose it are being out a form of digital currency of their own the point being that digital currency will soon take over the traditional financial system as we know it.
0.000 SRY