DEFINITION of 'Digital Money'

Any means of payment that exists purely in electronic form. Digital money is not tangible like a dollar bill or a coin. It is accounted for and transferred using computers. The most successful and widely-used form of digital money is the cryptocurrency Bitcoin. Digital money is exchanged using technologies such as smartphones, credit cards, and online cryptocurrency exchanges. In some cases it can be transferred into physical cash, for example by withdrawing cash from an ATM. 

BREAKING DOWN 'Digital Money'

Digital money has been conceived of since very early in the age of the internet. Several digital cash companies were founded in the early 1990s, the earliest and best-known of these being DigiCash. However most of these early initiatives failed or declared bankruptcy quickly; eCommerce had hardly integrated into the Internet, which was anyways not used for many commercial purposes until the late 1990s, and there were few retailers which would accept the early digital currencies. The advent of PayPal as an easy-to-use facilitator of digital financial transactions. 

Financial services companies facilitate digital money transfers and foster online transactions between complete strangers across long distances. Without digital money, many online retail websites would operate much less efficiently - online shopping with popular services such as Amazon are done  Digital money also makes it possible to bank online or via smartphone, eliminating the need to use cash or to visit a bank in person.

Any means of payment that exists purely in electronic form. Digital money is not tangible like a dollar bill or a coin. It is accounted for and transferred using computers. Digital money is exchanged using technologies such as smartphones, credit cards and the internet.

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