In what way does digital money resemble traditional cash?

Digital money resembles traditional cash primarily in that it holds value and can be used in transactions. Both digital money and cash function as mediums of exchange, allowing users to purchase goods and services. This fundamental characteristic is key to their use in commerce.

Just like cash, which can be used freely to buy items or pay for services, digital money serves the same purpose in both online and physical environments. Even though digital money exists in a non-physical form, it represents a claim to value similar to cash, making it an effective unit of account and a store of value.

The other options, while they may describe certain aspects of digital transactions or currency characteristics, do not capture this essential similarity between digital money and cash. For instance, the necessity of conversion to physical currency focuses on one aspect of cash which is not applicable to the usage of digital money itself. Similarly, the limited use for online transactions or the lack of intrinsic value also diverges from the broader functional similarities they share in economic transactions.