Digital Money
In short: Digital money refers to assets of value that exist only in digital form, unlike traditional physical coins and banknotes.
Digital money refers to assets of value that exist only in digital form, unlike traditional physical coins and banknotes. It includes bank balances spent by card or transfer, electronic money held in payment apps, central bank digital currencies, and cryptocurrencies.
Why it matters
Much of the money people use every day is already digital: when you pay by card, no cash moves, and banks simply update balances in their databases. What separates the different types of digital money is who keeps the record and who can change it. A bank or payment company runs a private ledger that it controls, while a cryptocurrency records balances on a public blockchain maintained by many independent computers. Stablecoins sit between the two, usually tracking the value of a fiat currency such as the US dollar while moving on a blockchain.
Example
Paying for a meal by card moves money from your bank account to the restaurant's account without a single coin changing hands: two digital balances are updated. Sending a stablecoin to a friend's wallet has a similar result, but the new balances are recorded on a blockchain instead of in a bank's database, and no bank sits in the middle of the transfer.