Electronic and crypto dollars: what they are, how they are used, advantages and disadvantages

Money no longer always looks like paper bills. There are electronic and crypto dollars. These types of currencies have one thing in common: they exist in digital format. Let's take a look at how electronic and crypto dollars differ from each other. How are they used?

What is the difference between electronic and crypto dollars?

Electronic dollars are digital money that only exists in virtual space. They are records in a banking system or payment platform. Electronic dollars are used for the following purposes:

• Online purchases in internet stores.
• Transfers to other countries where it is difficult or expensive to send fiat money.
• Payment of bills through banking applications.

Crypto dollars are a type of cryptocurrency pegged to the US dollar. They are created using blockchain technology. How crypto dollars are used:

• Trading on exchanges: buying, selling, and exchanging cryptocurrencies.
• Storing electronic funds at a stable rate, regardless of changes in other cryptocurrencies.
• International transfers. Crypto dollars are convenient for transactions between countries, as they do not depend on banks.

Many people use these types of virtual currencies. The amount on a bank card, PayPal, or WebMoney is electronic money. Although it can be cashed out, in its original form it exists only as digital records.

Examples of electronic and crypto dollars

USDT or Tether is a stable cryptocurrency pegged to the dollar. It is used to store funds and conduct fast transactions. It is often used on cryptocurrency exchanges. The advantage of USDT is that funds can be quickly transferred between wallets without intermediaries.

But USDT also has disadvantages. Some experts doubt the transparency of this token's collateral. Nevertheless, it remains in demand for trading and settlements in the crypto sphere.

Other types of crypto dollars:

• USDC (USD Coin) is a stable token developed with the support of large companies. It is distinguished by its transparency and regular audits.
• DAI is a crypto dollar that operates on the Ethereum platform. It is backed not by the dollar, but by a basket of assets.
• TUSD (TrueUSD) is a cryptocurrency with a high level of trust, as it undergoes regular checks and certifications.

WMZ is a digital dollar created by the WebMoney payment system. It is used for online purchases, money transfers, and payment for services. The convenience of WMZ is that it can be quickly converted into other currencies within the WebMoney system.

The main disadvantage of WMZ is that it is tied to a single platform. To withdraw money or transfer it to another system, you will need to pay a commission. Nevertheless, for WebMoney users, it is a convenient way to make payments.

Advantages and disadvantages of electronic and crypto dollars

Electronic and crypto dollars cannot be stored “under the mattress.” To use them, you need a smartphone or laptop and the internet. If a failure occurs, you could lose your funds. However, there have been no such cases so far, as the system is reliably protected.

Advantages of electronic and crypto dollars:

• Fast transfers without borders.
• Convenience of use for online payments.
• The ability to store them digitally without being tied to physical money.

The disadvantages of electronic or crypto dollars are that they depend on banks and payment systems. Using crypto dollars can be difficult for beginners at first. Some cryptocurrencies are not transparent enough in terms of what supports their stability. Despite their disadvantages, these currencies continue to gain popularity because they have advantages over fiat money.