Today we will explore digital currencies and debt forgiveness.

So, what are digital currencies?

According to the definition of Investopedia, “Digital currency is a form of currency that is available only in digital or electronic form, and not in physical form. It is also called digital money, electronic money, electronic currency, or cyber cash.”

Fairly straightforward. Money that is only available in an electronic support which requires internet access or a designated network. One of the biggest benefits of digital currencies is the removal of intermediaries, thus reducing the cost of transactions. Two parties in a common network can send and receive funds directly without having to go through a bank or any other channel. Let’s explore some of the types that we can most often come across.

Types

Digital currencies are understood to be those that are controlled or regulated by a recognized entity such as a country or central bank. Virtual currencies are those created by private entities which can include the developers of a technology, a company or association. And lastly, cryptocurrencies are virtual currencies that use blockchain technology (a digital ledger) to give transparency, traceability and security to transactions. Although blockchain is outside of the scope of this episode, it is the element that is truly revolutionary in the technological space. Its uses are limitless and the current market applications are barely scratching the surface. The most notorious cryptocurrencies to date are Bitcoin and Ethereum. Traditionally, one of the benefits of cryptocurrencies was the anonymity that it provided users, but that is increasingly less so with countless financial regulations being passed in many jurisdictions. This may seem irrelevant to some, but considering that our economies are driven by data, our data, that privacy is not protected rather exploited, eliminating options to be truly anonymous even if it’s just to buy a bag of potato chips should matter to all of us. With big data and AI, anyone that can access your information can know more about you than you know about yourself. We’ll leave privacy and data for another time.

Uses

The beforementioned types can serve different functions depending on who is enabling it. A country may use a digital currency to replace its standard fiat currency. A private company may incorporate a virtual currency as a reward system for its employees and customers. Cryptocurrencies can be used, depending on the type, for everything from paying for upgrades in video games to buying a home.

Benefits

All in all, the mayor benefit of digital currencies is the removal of intermediaries and in some cases, the anonymity that is similar to cash. The drawbacks, from my point of view, is that it combines all the disadvantages of current fiat currencies plus exclusive dependence on electronic networks. I generally think of worst-case scenarios in which there is no internet and power, but there is still a need to transact. In those cases, strictly digital currencies certainly don’t pass the test. Many would argue that those circumstances are rare and generally undesirable for all. It’s true, but it doesn’t mean that eliminating other options of transacting that don’t rely exclusive on electronic means is advisable.

Now on to debt forgiveness, debt relief, debt cancellation are also some of the names that it goes by. There is a lot of talk around this subject in recent months due to the increasingly complicated economic climate for most of the world’s population. Continuous restrictions increase the pressure on governments to provide financial assistance and in some cases consider Universal Basic Income. The latter is hotly debated, and for now, I will skip it. Debt cancellation is an ancient concept that has formed part of organized societies since