"The future of money is digital", declared the consulting firm PwC, in its Global Central Banks Digital Currencies Index 2022. And everything indicates that it is true. In recent years, the market has not stopped evolving and generating new players. Some concepts that were unknown before are now on everyone's lips: digital asset, blockchain, crypto assets, decentralized finance...
But what is digital money? According to a report by the Spanish Institute for Strategic Studies, this meaning has two aspects. On the one hand, it is the funds that are stored in electronic wallets and, on the other, it is the money that is issued electronically through a computer network, as is the case with cryptocurrencies.
In the case of virtual transactions backed by financial institutions, it is easier for the person to control what happens with their funds. “Technology is one more alternative to money protection”, explains the financial adviser, Andrés Moreno. "In this case, digital money is not an asset that can be easily altered, but it will still have volatility like other markets."
In sectors that are not yet regulated, as is the case with cryptocurrencies, it is difficult for the user to control the fluctuations of the markets. For this reason, the European Union has proposed a crypto asset market regulation, which is expected to come into force in 2024, and which affects crypto issuers, exchange platforms and digital currency wallets. Its objective, according to the European Commission, is to "ensure that the Union embraces the digital revolution and leads it with the help of innovative European companies at the forefront, so that the benefits of digital finance are within the reach of consumers and businesses." of Europe".
Added to this new regulation is the entry of central banks into the market. According to the PwC index, more than 80% of these entities around the world are considering launching their own digital currency or already have their own, to make payments and everyday transactions electronically.
Regardless of attempts to control the market, the user must be very aware of where they are messing with their finances. Therefore, before carrying out any type of operation in the digital world, people must have acquired good financial planning habits with measures such as: preparing a budget, controlling debt or using credit responsibly.
Once these behaviors are clear, a prudent strategy comes into play. "In a digital portfolio you have to understand that you have to diversify," says Andrés Moreno. "And keep in mind that it can always have flaws."
