What is digital money, and how is it different from the money in your bank?

Most money today is already digital. When your salary arrives in a bank account or you pay through Raast or a mobile wallet, no notes change hands: a bank updates a record of what it owes you. That record is backed by the bank and, behind it, by the State Bank of Pakistan.

Crypto assets such as Bitcoin are a different kind of digital money. There is no bank keeping the record. Instead, thousands of computers around the world keep identical copies of a shared ledger, called a blockchain, and agree on every change to it. No central bank issues Bitcoin or stands behind its value.

Between the two sit stablecoins, tokens issued by private companies that promise to be worth one US dollar, and central bank digital currencies (CBDCs), which are digital cash issued by a central bank itself.

The lessons that follow take each of these in turn: how a blockchain works, what a wallet is, how stablecoins and CBDCs differ, and how to stay safe.