How does digital money work - Marvin Germo

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How does digital money work

By: Marvin Germo | April 1, 2021

I know a lot of you are either interested in cryptocurrencies or already invested in them. In my previous blogs, I shared with you some helpful insights about cryptocurrencies, how they work, what’s Bitcoin all about, what’s Ethereum and ADA, and so on. I hope you learned from them!

With the existence of cryptocurrencies, many investors and aspiring ones are still confused about their usage. Can you use Bitcoin to purchase a house or a car? Is it safe to store your digital money in your digital wallet? What’s the difference between digital money and real currencies? Are they like cash that’s stored in my  PayPal? Let me show you the interesting facts about digital money that you should know.

Digital money is intangible

Unlike real currencies where you can hold bills and coins, digital monies are intangible. They don’t have bills or coins that represent them unless you exchange them for a specific currency. Digital monies are designed to be digital, which means that you can only use them online and you can only store them in your digital wallet. Without a digital wallet, you won’t be able to buy or use them. To invest in Cryptocurrencies click here.

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Digital money is bought

You can’t just pick up digital monies anywhere on the internet. You have to buy them if you want to possess a certain digital currency. For example, if you want to own a Bitcoin, you have to use real currencies to buy one. You have to deposit your money somewhere based on the instruction of your broker so that they can exchange your real currencies for digital monies. It works similarly to foreign exchange. However, in this instance, you are exchanging real currencies for digital currencies. Of course, if digital money is bought, it can also be sold. If you don’t want to own digital money anymore, you can just request from your broker to convert your digital money into your own currency and deposit it into your bank account. To have a Bitcoin Wallet click here. 

Are they like your money in wallets?

No. What’s stored in your digital wallet like PayPal are still real currencies. You don’t have to convert them or exchange them for something else. You can use them to pay for your groceries and other stuff you buy online. The only similarity between digital money and your money PayPal is that they are stored in a digital wallet. But, their nature and usage are entirely different.

What can you do with digital money?

Well, you can do a lot with it. Digital monies like Bitcoin are starting to be acknowledged as real currencies. In fact, Tesla has just announced that you can now buy a Tesla car with your Bitcoin. You can use digital money to purchase some things on the internet, however, the use of it is limited right now as not all companies accept Bitcoin at the moment. What you can do to use them is to exchange them for real currencies first.

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