Digital Fiat Currency and Global Trends

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Digital Fiat Currency and Global Trends
1. Introduction
As humanity evolves, so does the means of exchange. The earliest form of exchange, bartering, entailed the exchange of goods with other goods. A lot of complications and disagreements accompanied inefficient bargaining, which necessitated the invention of a different form of exchange. Money, used as a unit of measuring currency and a medium of exchange then replaced the traditional form of exchange and has since evolved to the current era of digital currency. The evolution of the medium of exchange has caused a lot of disruption in almost every part of human lives, with the emergence of banking systems being a major milestone. Any other note, piece of hardware, or symbolic object can act as currency, but that which is backed by the government and recognized as a legal tender qualifies as a fiat currency used in the global economy. The disruptive technologies of the 21st century have led to the emergence of new forms of currencies and as a result, there is an emerging debate on the use of Digital Fiat Currency (DFC). As a matter of fact, some jurisdictions have started rolling out DFCs, which have performed quite well. One thing that is for sure is that the DFC is going to bring about major disruptions to major global trends, and in the worst-case scenario, it might drive the traditional banking institutions out of business. Nonetheless, the positive impacts of DFC outweigh the disadvantages and it is worth embracing the radical change.
2. History of Digital Currency
Digital currency entered the economic world in a rather peculiar manner, inspired by skeptics and pioneers of computer technologies. Privacy concerns were the main driving forces for the skepticism towards the digital era (Kenny par.2). Computers and computer technologies reigned in the global environment from as early as the 1960s, and by the 80s, computers started playing a significant role in workplaces and homes. Not only did the skeptics advocate for safe communication in the digital world, but also safe and secure transactions (Kenny par.3). The idea gave rise to the concept of untraceable digital currency where the sender and receiver remain anonymous, unlike the electronic transactions using a credit card that had already been used. Digicash, created by cryptographer David Chaum in 1989 (Kenny par.3), became a breakthrough in the development of the digital currency. The idea was purely based on the concept of secure and untraceable transactions.
Digicash failed to impress many in the e-commerce business, and most of the shoppers preferred the traditional payment systems, leading to its demise in 1998 (Kenny par.7). Despite the failure, Digicash laid down the foundation for the future development of other digital currencies, with its concepts, algorithms, and formulas replicated in subsequent digital currencies. Hashcash digital currency replaced the depleted Digicash but also diminished sooner than expected due to higher processing power that resulted in inefficiency. Aside from Digicash, more attempts to publish digital currency including HashCash and b-money, the notable champions for the decentralized payment systems being Wei Dai and Nick Sza...