What seemed like news from the future today becomes a reality of the present; the economies have been updated, and with it, the evolution of money. Ideally, there is nothing wrong with purchasing this electronic currency in large amounts via bitcoin up if it fits your budget.
Something that had been prepared for a long time only to be executed; preparation is necessary not only internally from banking and financial institutions but also society.
The creation of digital currencies has as its primary objective to position itself on cryptocurrencies such as Bitcoin, based on the theory that these serve as an effective alternative to traditional money.
The project to create the digital Euro is underway, and nothing can stop it; we could be facing the possibility of the disappearance of physical money; consequently, perspectives have been created in the face of the crisis that arose in 2022, focused on the virtues that this type of currencies offers to the economy.
Table of Contents
What does digital money refer to?
Many doubts arise when the term “digital” is included in the financial vocabulary and money transactions because many often compare cryptocurrencies with digital currencies, and both have well-defined differences.
In the specific case of the digital Euro, it will be backed by a Central Bank to meet the needs of citizens; on the other hand, it will be subject to regulations such as those that govern Fiat currencies.
On the other hand, this type of money will be characterized by maintaining and respecting privacy and avoiding risks to the information and data of each person. However, the value of said coins will strictly depend on the central banks, which must maintain their weight regardless of whether The Euro is physical or digital.
Digital money also offers the possibility of making much faster payments, something that, unlike cryptocurrencies, is slowed down.
In turn, blockchain technology is one of the alternatives that could be used to guarantee the optimal security that a currency of this type requires.
One of the aspects that governments and banking, and financial entities like very little is the decentralization of cryptocurrencies. However, to create the digital Euro, it has been indicated that the euro system does not intend to monitor the behavior of payments between agencies, government, or other public institutions.
The most crucial element in this whole process of creating digital money backed is identifying users with it because the technological adaptation could easily digest that first contact that banking users have had to demonstrate tradition after the COVID-19 pandemic.
Anonymity takes a step back.
In the cryptocurrency market, one of the main attractions has always been the level of anonymity offered for the execution of transactions and the users’ identity data, which has undoubtedly generated a lot of controversies.
In the case of the creation of the digital Euro, this anonymity ends since the state and traditional financial entities’ main task is to confirm the information and the mobilization of money between accounts with the primary intention of avoiding fraud, money, or terrorism.
Anonymity, as it is known in cryptocurrencies in digital currencies, is completely annulled and is not considered an appropriate or viable option because it is against public policies for what they are currencies backed by States and central banks.
It would also limit the use of the digital Euro as a means of investment, for which it is essential to know the investors’ data.
The evolution of the traditional financial system
The introduction of the digital Euro could bring several benefits to the economy, where users would make digital payments throughout the euro area, possibly using physical money.
It is the introduction of central banks to the growing digitization of payments, where one of the key elements is to maintain the fundamental role of the central bank in the money economy and the coexistence of both payment methods where the anchoring and convertibility between both are essential.
Conclusion
According to statements by the authorities, the European Central Bank, in collaboration with the European Commission and the legislative and economic parts of the government, is creating a broad concept of what the digital Euro will be, where perhaps its regulatory framework will arrive in the year 2023.
Although it will be in 2025-2026 that it can be implemented as a financial alternative among citizens to reduce inflation through the reduction in the issuance of Fiat bills and coins.
