This article is written for that reason.
To explain in a simple and understandable way what digital money is, which is gradually entering transactions and our lives, writes Michalis Sallas.
Technology is transforming our daily financial activity and is changing even the perception of money as we know it.
In an intervention article, Michalis Sallas, President of Lyktos Group, Honorary President of Piraeus Bank, former University Professor, clarifies the landscape around digital money, explaining the concept of stablecoins and the operation of the digital euro, stressing that it is not a new currency but a faster, cheaper, and more direct way of moving the money we already know, with full transparency and security in transactions.
As he writes.
In recent years, we hear the term “digital money” more and more often.
It appears in discussions about payments, banks, technology, and the future of the economy.
Despite this, something paradoxical is observed.
Even people who are professionally active in the fields of business and economics often do not have a clear picture of what digital money exactly means, how it works, and what changes in practice.
This article is written for that reason.
To explain in a simple and understandable way what digital money is, which is gradually entering transactions and our lives.
The money we use today already moves to a large extent digitally.
Salaries are paid into bank accounts, payments are made with cards and applications, and money transfers are carried out electronically.
What is changing is not that money becomes digital, but the way in which it moves.
Stablecoins, digital units with stable value
Digital money is something different, it reduces intermediate stages, accelerates transactions, and limits costs and fees.
One basic type of digital money is stablecoins, for which significant tension has already emerged in New York.
Stablecoins are digital units of money with stable value.
Each stablecoin is linked to a real currency, usually the euro or the dollar.
A stablecoin corresponding to the euro has a value equal to one euro.
It is not an investment and does not exhibit value fluctuations.
Their creation is simpler than often believed.
The user, reliable and creditworthy, sends regular euros via bank transfer to a company that issues stablecoins.
The company receives the money and creates the same number of digital units, which appear in the user’s digital account.
If one thousand euros are deposited, one thousand euros in stablecoins are created.
The euros remain in bank accounts or are invested in very safe assets.
When the user wishes to return to the banking system, they send back the stablecoins.
These are deleted and the euros are deposited into their bank account.
The mobile phone as a digital wallet and identification
The use of stablecoins takes place through mobile applications that function as digital wallets.
The user sees their balance, sends and receives money easily, just as they would send a message.
For example, a Greek professional is paid by a client abroad.
The client sends the money in euro stablecoin.
The professional receives the amount within a few minutes in their digital wallet.
When they need the money in their bank account, they give a conversion order.
The stablecoins are canceled and the euros are deposited via a standard bank transfer.
An important point is the recording of these transactions.
The professional who receives the amount is not invisible.
To use stablecoins, they have opened an account with the issuing company, have been identified, and every conversion to bank money is fully recorded.
At the same time, the transfer of the stablecoin itself is recorded in a digital transaction ledger, where the amount and the participating digital wallets appear.
The identity is linked indirectly through the company that holds the user’s details.
When the money returns to the bank, the record is complete, as in any bank transaction.
Digital euro, public money in the new era
Stablecoins, however, are not state money.
They are issued by private companies and rely on trust that the funds backing them exist and are properly supervised.
The digital euro is an initiative of the European Central Bank.
It is the euro in digital form.
Just as banknotes today constitute public money, so too will the digital euro constitute public money, simply stored and transferred electronically.
It will not be issued by a private company and will not depend on third party reserves.
The use of the digital euro will also take place through mobile applications that function as digital wallets.
Citizens will be able to transfer part of their money into digital form and use it for everyday payments, such as purchases, bills, and money transfers.
Example of digital euro use.
A citizen pays their water bill through a digital euro application.
The amount is transferred immediately from their digital wallet to the provider’s digital wallet.
The transaction is recorded, just like an electronic payment today, and the money remains euros throughout the entire process.
Here too there is recording, but with a different logic.
The digital euro is designed so that transactions are recorded for security and taxation reasons, while at the same time maintaining privacy in everyday use.
It is not anonymous money, but neither is it a tool of total surveillance.
What digital money is not and the benefits for Greece
It is important to clarify what digital money is not.
It is not a new currency, it does not abolish the euro, and it does not eliminate cash.
It is not an investment product and does not promise profits.
It is a new way of using the same money we already know.
In practice, for citizens and professionals, digital money does not require special knowledge.
The mobile phone functions as a wallet and payments are made with simple movements on the screen.
Digital money upgrades the economy because it makes transactions more immediate and simpler.
Businesses are paid quickly, international transactions are simplified, and small businesses gain access to modern payment tools.
For countries such as Greece, with many small businesses and intense tourist activity, this development is particularly important, among other reasons, because it has limited costs and fees and greater transaction speed.
In everyday life, many things remain the same.
We work, pay, and save as before.
What changes is the way money moves around us.
Understanding this change allows us to use it safely and for the benefit of the economy and society.
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