Digital money: navigating the landscape of opportunities and challenges

Abstract

The invention of these cryptocurrencies, along with the related central bank digital currencies (CBDCs), will change the world's scenario. A comprehensive examination of the history, impact on financial services, applications, societal implications, and prospects of the digital money ecosystem. This review adopts a systematic and rigorous approach to synthesizing current knowledge to identify gaps for future research, drawing from a multidisciplinary collection of scholarly sources that include academic journals, industry reports, and relevant publications. The impetus to technological advancements and probable changes in the prospects of increased financial inclusion and economic development, among others, are some of the reasons behind the promotion of digital money, which the findings suggested. Conversely, it seriously challenges traditional banking practices, monetary policy implementation, and regulatory frameworks. Use cases span various applications such as e-commerce, micro-payments, the Internet of Things (IoT), and smart contract applications to decentralized finance (DeFi) integrations. Implications to society with the adoption of digital money include changing dynamics of consumer behaviour and ethics and issues related to sustainability in sustainable economic development. These results imply the necessity for policy, business, and stakeholders' collaboration to traverse a digital money landscape where complexity must be managed to foster innovation but not risks. With insights from this review, stakeholders will engage in the responsible integration of digital money with the global financial ecosystem to foster three dimensions: financial inclusion, economic growth, and social advancement.