Digital currency is electronic money that acts as an alternative currency. It is independent of government and central banks and not backed by any national currency. It differs from virtual money which is used in virtual economies as it is used in transactions with real goods and services. Initially digital currencies are often backed by a promise to pay a set amount of gold or silver bullion in exchange for each of its units. Later currencies floated against whatever individuals are willing to exchange for it.
There are so many businesses that are now global but being global brings its own difficulties. Digital currencies actually assist companies as they allow users to send money around the world quickly and economically, an advantage for companies pursuing growth in a global context. Most companies are still shy of integrating digital currency into their business operations at present. Change takes time.
Some advocates claim that currencies such as Bitcoin could be as transformative as the Internet itself, because it allows people to send money using IP the way they currently send information. But the digital currency will likely take years to catch on. At present, it is more often used as a commodity by hobbyists and technology enthusiasts than as a currency by businesses.
Some companies will remain circumspect about integrating digital currencies into their business due to the reputation for being the currency of choice for those who make illegal purchases, which makes government agencies suspicious of all organisations that use it. Another problem is the possibility that countries may decide block digital currency trade, which will undermine its value as a globally accepted currency.
There have been money laundering probes involving digital currencies. The nature of these businesses allows huge amounts of money to be transacted outside the control of national governments. Huge numbers of transactions can be facilitated quickly, easily and with anonymity. Any investigation would normally involve multiple countries and usually very large sums will have been transacted. The unregulated nature of digital currencies can clearly allow criminality to move in and make us of the ease with which transactions can be carried out with anonymity. This anonymity is easily enhanced by having no direct link between any customer’s traditional bank account and the digital currency provider’s system.
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