Digital currency is nothing more than a virtual banknote or coin that exists in a digital wallet on your smartphone instead of a billfold or a purse. Digital currencies issued by central banks are backed by the state, just like traditional fiat currency.
China was the first to experiment with digital currencies, but other countries are interested in the idea. US officials have already toyed with the possibility of a digital dollar. A Democratic proposal for stimulus payments in the wake of the coronavirus pandemic featured digital currency deposited into digital wallets.