Over the years, the way people spend money has changed in many ways. You can now purchase items online without handing out cash to the seller or transfer money without going to the bank — all thanks to the Internet and digital money. But unlike cash, all you can see are numbers. So, who controls all the money and who manages these numbers?
The debate has gone on for years, with some people claiming that financial organisations and commercial banks control all the money. Others believe government bodies, such as central banks, hold the real power. In truth, no single entity entirely controls the flow of real money online. However, several parties are involved in managing and overseeing the movement of funds from one account to another.
These days, you can use cryptocurrencies and electronic wallets to make purchases and transfer funds instantly. These digital platforms give you control over your money and allow you to monitor your transactions. Whether you’re shopping online or playing games where you can win real cash prizes, websites use these digital concepts to facilitate transactions and enable you to withdraw your earnings securely.
Traditional Money vs. Online Money
Today, cash and digital money are both valuable. It’s just that they work differently. You can think of digital money as an electronic version of cash, as it only exists online. Even though you cannot physically hold it, digital money is more flexible and accessible compared to cash. The table below reveals some things you need to know about real money and online cash:
| Features | Traditional Money | Online Money |
| Form | Traditional money only exists physically in the form of cash, cheques, or coins | Online money is strictly digital — it’s stored in bank apps and e-wallets |
| Access Point | You can get it from the bank, an ATM, or a physical store | You can deposit or withdraw your money using your smartphone and the Internet |
| Transaction Speed | Transactions are processed manually by banks, which takes time | Transactions are instantaneous |
| Control | Cash is controlled by centralised institutions such as banks | Shared control between banks, fintech, and users |
| Record Keeping | The bank keeps a paper-based record or uses an in-house system | Records are stored digitally or on cloud-based platforms |
| Availability | You are limited by your bank’s working hours or location | You have 24/7 access, regardless of your location |
| Security Risks | Banks can be robbed & records can get lost | Online platforms can be hacked, and users can be defrauded |
Key Players of How Money Moves in the Online Space
Since the dawn of civilisation, the concept of money has remained the same. The main difference today lies in how it moves. For instance, when you send money, it goes through different channels before it reaches the destination. Below are the different bodies responsible for the control of cash online:
Governments and Central Banks
Through central banks, the governments can oversee the country’s financial systems. This enables them to implement policies and ensure stability. But beyond that, these central banks are responsible for issuing digital versions of their national currencies, which has shaped the use of online money, making it more valuable.
Commercial Banks
In today’s digital world, the importance of commercial banks cannot be understated. You don’t need to visit the bank before you can deposit or withdraw your money. With their user-friendly mobile apps, you can move money from one account to another instantly.
Fintech and Payment Processors
Despite the relevance of commercial banks, fintechs and payment processors are becoming increasingly popular in the online space. You can purchase items without using a commercial bank. All you need is an e-wallet like PayPal, Apple Pay, Venmo, Skrill, etc.
Consumers
While institutions and corporations pull the strings, it’s the consumers who feed the system. Our clicks, subscriptions, digital purchases, and data-sharing habits sustain the ecosystem. Ironically, it is safe to say that the users who provide the money have the least control over how it’s managed and manipulated.
Decentralised Control: The Rise of Cryptocurrencies
Cryptocurrencies have made their way into our daily lives. Many people consider them the most valid form of digital money, as they are completely decentralised, with no central authority.
Online platforms and stores are now integrating cryptocurrencies into their payment systems, making it easier for people to monitor their funds without involving any third parties. However, while cryptocurrencies offer financial freedom from governments and financial institutions like commercial banks, they also come with risks. For instance:
- They do not have legal protection.
- Transactions are rarely reversible.
- Cryptocurrencies are susceptible to fraud and cyberattacks.
- It is easy to lose access to your crypto wallet.
Protecting Your Funds Online: Watchdogs, Rules, and Security
Despite the growing popularity of digital currency, people remain vulnerable to losing their money to cyber theft and fraud. As such, financial regulators such as the SEC, FinCEN, BIS, IMF, and FATF have adopted modern technologies to oversee online transactions.
These financial regulators don’t just serve as watchdogs. They also implement tight security measures into payment systems to combat online fraud and ensure the safety of your funds.
Conclusion
Whether you are transferring money to a friend, buying an item online, or paying for a service, you are spending money digitally one way or another. Unlike traditional money, where the bank holds all of your cash, digital money works differently.
No one truly controls the money that flows online. Control is shared among the government, financial bodies, and you. Think of the flow of money as a food chain: from top to bottom, every party involved is responsible for management and control.
