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The revolution around the internet and its improvements over time have changed a lot in human existence. It is one of the enablers of globalization. The internet brought about its advantages and also the disadvantages too. Some of its advantages are online marketing, online shopping, placing orders, and rendering delivery services online. Amazon, known to be one of the best shopping websites, started by selling books, movies, electronics, household equipment, toys, and many more. They took first-hand advantage of the internet making it a different method of commerce. Today Amazon has gone greater with a lot of improvement. The development of the internet has led to an increase in the demand for online payment solutions, which brought about the existence of companies like PayPal, eBay, and many more.
Evolution of Digital Currencies
Digital currencies are a natural offshoot of the development of eCommerce and it has created a great wave on the internet on the revolutionized way of how people buy and sell goods. The Internet has been a great aid to the eCommerce system and has also made it very easy for traders to meet with customers and also make transactions regardless of distance and time. eCommerce gave rise to the need for money transfers which was one of the reasons why people should transact successfully using the system.
How money developed historically could be a good example of what digital currencies are all about. The measures of moneywere not the notes we are spending, but some valuables were attached to them and were used as a medium of exchange and store of values. Items like gold and some other valuables were used before the development of coins and paper currencies. With time, it’s not something easy to keep moving around with gold. This made traders want to keep their gold in a bank reserve then they get a note as a means of exchange for the gold being reserved. That was how gold became a reserve for money and a store of value.
So the notes collected in place for the gold being reserved are what gradually evolved into the paper currency we use today. So indirectly all the paper money in the world today and in circulation should have a backup in gold. And as time goes on, this paper currency begins to have its measure of value without any reserved gold in replacement. Gold became redundant since no one had it in mind again to go and check whether the paper currencies held were backed by gold reserves.
The first generation of digital currencies was the cash transfer system which was made available through eCommerce. So the digital currency would have the same value as what people have at the bank in paper currency. People began to use their real currency to load their online accounts. They won't have to hold those bulky currencies everywhere they go and it makes it even way easier to send from one party to another. With the aid of the internet, people found it easier to send money to any country around the world. Then at the receiver's end, they would have to go to the bank or a cash vendor to withdraw the received money for use. This had been the gradual evolution of money from gold to paper currencies and now the introduction of the internet brought about the digitization of currencies.
Having that money online made it easier to use them for online transactions, made it easier to pay bills, and also buy and sell at convenience without going to the banks or even holding a bulky amount of cash all around. Most times the money that is being uploaded online and is circulating in the cash transfer system will never leave the internet, the value would remain online, for as much as the system continues to exist. For example, money held by the PayPal service is backed by real money in the bank, but the figures are saved online and they keep circulating within the system.
Gradually people began to have a lot of confidence in digital currency. They believe in the amount they have in their online accounts regardless of if they have the same amount as paper currency in the bank. It's just a matter of time before real money becomes irrelevant when it comes to online transactions, just the way paper currency took charge over gold. People would no longer bother to check if there is any real paper currency backing up the amount they have in their online balance. So this is just an illustration of how digital currencies have come into existence and how they will continue to evolve.
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