Online commerce has created a vast, highly profitable virtual market. With e-commerce retail transactions being projected to top $4 billion by 2020, merchants should be aware that current payment processing costs are detracting from maximum profits. Built upon the revolutionary technology, blockchain, digital currency offers an innovative, streamlined way to virtually transfer value in a prompt, economical manner.
What is Digital Currency?
Digital currency consists of a range of computerized value transfer platforms which now offer a transparent, economical mechanism for global payment and value exchange. It is digital cash used to pay for products and services over the internet. However, the technology can do much more.
Digital currency, also referred to as cryptocurrency, was introduced by the payment network and virtual coin known as Bitcoin and simply applies “digital encryption to a system of money.” Bitcoin uses peer-to-peer technology to operate without centralized banks or governments. Built upon Bitcoin’s code is a network called Dash - an open-source platform specializing in instant payments using digital cash tokens. Dash has delivered innovations to the digital currency industry that have remedied the insufficiencies of Bitcoin. The Dash network provides instant payments, privacy, flexibility, self-funding mechanisms, capacity, ability and governance.
Meet Ryan Taylor of Dash. Taylor is an integral member of the network working as the CEO of the Dash core team. When asked to define digital currency, Taylor stated:
“The definition of digital currency is a lot broader than just being able to pay for goods and services. We’re seeing some of those use cases emerge, but digital currency is any token-based network that offers value to its users with the services it provides and allows for value to be delivered to its users because of the structure.”
Taylor goes on to explain the growing number of digital currency use cases that are just beginning to be explored.
How Can Digital Currency be Used?
“One coin cannot be all things to all people and all industries,” Ryan Taylor said as he spoke about his excitement for the future and fruition of digital currency.
Taylor envisions the outlook of digital currency to be much more than a series of payment networks limited to monetary value transfer. He sees the industry moving from a single coin (which is currently dominated by Bitcoin) to an industry in which “different projects target specific use cases and optimize their solutions for those markets.” He commends those in his field who dare to have a clearer vision, for they are outpacing the growth of the overall market.
When noting the case of Ethereum, another digital currency network, and its coin, Ether, he states: “it [Ether] can be used as a digital currency in the former definition, but it is intended to be used as a fuel for funding the execution of smart contracts.” Smart contracts are self-executing contracts with agreement terms and conditions being written into code that help avoid the middleman when engaging in exchange while defining the contract boundaries and automatically enforcing the obligations of each party. Through Taylor’s Ether example, we see an opportunity for digital currencies to become a fuel for smart contracts, possibly one day negating the need for intermediaries in monetary exchange, property exchange, and the exchange of innumerable things of value.
In the case of Dash, the network is the largest form of digital currency that is focused on exclusively being a payment network and a form of tender as opposed to being a store of value or a settlement layer. Taylor revels in the variety of different use cases of digital tokens, unique strings of characters that authenticate user identity, that are just beginning to be explored.
How Does Digital Currency Utilize Blockchain Technology?
A blockchain consists of a single, replicated block that is continuously updated across numerous databases – for more information on blockchain technology visit our blog: “What is Blockchain?”
Taylor describes Blockchain technology as “the first example of a fully-distributed database that enables anyone to update it within the network’s rules.” Users are allowed a great deal of integrity on Blockchain platforms as the technology secures immutability – information cannot be altered.
Digital currency is coded on a Blockchain operating system. Each transaction exists on a block in the decentralized chain that constitutes a permanent record of the transaction that is public, yet absolute. The currency’s capacity to keep ordered track of the immutable transactions protects against instances of crime such as fraud and money laundering by allowing compliance mechanisms to check for dishonest transactions.
Blockchain technology allows for the absence of intermediaries in the realm of digital currencies. The network that Dash coin exists on is able to authenticate the value transactions using the digital block ledger, rendering further validation services unnecessary. By terminating the need for intermediaries Blockchain technology allows digital currencies to be more cost efficient, instant, private, flexible, and compliant than traditional payment platforms. Though the future of blockchain and digital currency are unknown, the possibilities for growth and social change are endless.