So What is virtual currency?Virtual currency is a type of irregular digital currency that is available only in electronic form. It is stored and transacted only through specified software, mobile or computer applications or dedicated digital wallets, and transactions take place over the Internet through secure, dedicated networks.
What is virtual currency?
Bitcoin is a virtual currency, virtual means that it has no physical form like other currency, it is a digital currency. This is a currency that you can neither see not touch. It is only stored electronically. If someone has bitcoin, he can buy goods just like the common currency.
Virtual Currency is considered a subset of the Digital Currency Group, which also includes Cryptocurrency, which exist within the blockchain network.
- Virtual currency is a currency held within a blockchain network that is not controlled by a centralized banking authority.
- Virtual currency is different from digital currency as digital currency is only the currency issued by the bank in digital form.
- Virtual Currency is uncontrolled and therefore experiences dramatic price movements as the only real force behind trading is consumer sentiment.
Virtual currency can be defined as an electronic representation of monetary value that can be issued, managed, and controlled by private issuers, developers, or founding organizations. Such virtual currencies are often represented in terms of tokens and may remain unregistered without legal tender.
Unlike regular money, virtual currency relies on a system of trust and cannot be issued by a central bank or other banking regulatory authority. They derive their value based on underlying mechanisms, such as mining in cases of Cryptocurrency, or support by underlying assets. Anyone who looks at the prices of Cryptocurrency will see the effect of psychological trading.
The term came into existence around 2012, when the European Central Bank (ECB) issued and controlled by its developers and used “unregulated funds” as a payment method among members of a specific virtual community. Digital currency was defined to classify “digital money”.
Difference between Digital, Virtual and Cryptocurrency
The digital currency is a superset of all currencies, including the virtual currency that contains CryptoCurrency. Compared to virtual currency, a digital currency covers a large group that represents monetary assets in digital form.
Digital currency can be regulated or unregulated. In the former case, it can be denoted as sovereign currency – that is, the country’s central bank can issue a digital form of its fiat currency notes. On the other hand, a virtual currency is often irregular and therefore constitutes a type of digital currency.
Cryptocurrency such as Bitcoin and Ethereum are considered a part of the Virtual Currency group. A cryptocurrency uses cryptography technology that keeps transactions secure and authentic, and also helps to manage and control the creation of new currency units. Such Cryptocurrency exist and are transferred to dedicated blockchain-based networks that are open to the general public. Anyone can join and initiate transactions in Cryptocurrency.