Digital Currencies, Cryptocurrencies and Central Bank Digital Currencies

The history of money reveals a pattern: there has been a trend of money dematerialization over the centuries. The majority of money now circulates in electronic form. Banks, governments, and institutions are analyzing and researching the economic and technical viability of implementing digital money, as well as the implications for monetary and fiscal policy. Digital currencies are essentially e-cash that does not require any specific encryption technologies. The financial system has the potential to be transformed by digital money, and the digital money revolution will take place on a worldwide scale. Cryptocurrencies are digital currencies that encrypt and verify network transactions using cryptography. Cryptocurrencies like Bitcoin could be the future of payment systems or even how we exchange value over the Internet in the coming years. Bitcoin has the potential to be a revolution because it provides people with a new level of sovereignty and, as a result, a new form of freedom, and it represents an alternative to our current financial system. Most central banks, on the other hand, are experimenting with central bank digital currencies (CBDCs). A CBDC is a digital currency that is issued by a central bank and is widely used. Thanks to the enormous labor and attention that central banks are spending to digital currencies, they will soon become a reality. We present and discuss the characteristics of digital currencies and crypto currencies in this study, as well as the digital currencies used by central banks (CBDCs) and open issues.