For practically the entire history of mankind money has played a fundamental role in the development of all types of commerce, also influencing the politics and culture of a certain region. And to this day, the different currencies that exist around the world play an important role in our daily lives. But with the advent of technology and the computing world, many things have changed, including the way we view money.
One of the advantages that the virtual world has presented is that the legal regulations did not exist for this, reason why the market adjusted to the needs of the users; and one of the most renowned creations are virtual currencies, but with this term doubts arise, such as what they are, how they arise, what exist and what movements can be made with it; so in order to clarify all these doubts we have written this article.
What is it?
A virtual currency, It is a type of digital money that is not regulated by conventional financial institutions, and that is issued and controlled by developers. In addition to the fact that this type of currency must be used and accepted by the members of a virtual community. This definition is from the European central bank, but to put it in simpler terms we can say that these currencies are a type of digital money that is not issued by central banks or by any public authority, and that it is used and accepted by normal people as a means of payment for goods or services.
Now, with the passage of time and the increase in the popularity of these currencies, there are governments that have tried to regularize them; and some have not allowed or defined them as currencies, this they have done to be able to regulate in a correct way the taxes that they imply. "Virtual currencies". However, this means that one currency is not considered the same as another, which makes it unfeasible for the virtual currency to be defined as "currency".
However, for practical purposes we will handle virtual currencies as a physical currency. But we must clarify that there are 3 types of virtual currencies. Some are the closed virtual currencies, others are the flow of currencies in a single direction, and finally we have the convertible virtual currencies, let's study each one of them.
Closed virtual currencies
On some online platforms there are some types of virtual currencies that serve so that we can enhance virtual purchases; An example would be video games, in which we may have coins; but nevertheless these currencies do not have any direct relation with the real world. In other words, with this type of currency we cannot carry out transactions of physical goods.
Currencies with currency flow in one direction
This type of coin is one in which there is a real money to virtual money transactionHowever, it is not possible to convert from virtual money to real money. An example of this type of virtual currency can be the various wallets that companies give to their customers in order to offer rewards such as "points" that they can later exchange for products.
Another example of which could be this type of virtual currencies They are the prepaid cards of some platforms such as apostare, in which we enter real money so that with virtual money we can make the purchase of virtual items such as movies or various applications. Although this type of currency allows you to acquire various goods through the internet, they have the limitation that we cannot change from virtual to real currency, but the following type of currency, which is the one that interests us the most, if it allows it.
Convertible virtual currencies
This type of virtual currencies They are the ones that can flow in both directions, both from real to virtual money and vice versa. This type of currencies is the one that allows us to carry out transactions, as well as to carry out currency exchange. Within this type of virtual currency we can find 2 different types, cryptocurrencies and those that are not encrypted. Let's go through each of those.
By definition, cryptocurrency is the digital currency that is cryptography in order to protect the various transactions in addition to also protecting the creation of new currencies. This type of currency is the safest and the best, because it allows our money to be more secure, in addition to that, by allowing the various electronic money transactions, will facilitate many of the processes we carry out.
Those that are not cryptocurrency have the risk of being falsified, stolen and even created by someone with computer skills. This is why they are the least use. But so far everything looks simple, virtual currencies that have a real value; However, these types of currencies pose great challenges for institutions that were used to regulating only the physical world.
The challenges
The challenges that this type of coins They present are mainly for central banks, which are responsible for issuing physical money. On the other hand, it is also a challenge for regulatory institutions in financial areas. To public entities in charge of regulating financial areas such as the Ministry of Finance. But these have not remained immobile, but have made some legal regulations that have advanced in various ways, let's look at some of the most iconic events.
The first event that we will mention is that of March 20, 2013, in which the United States Treasury guide promoted that the financial crime control network issued a guide in which it was clarified how the bank secrecy law of the United States applies to those persons who create, or exchange, or transmit the virtual currencies. Clearly this is an attempt to prevent virtual currencies from becoming very popular.
In 2014, the entity known as Securities and Exchange Commission warned in one of its communications, the dangers involved virtual currencies like Bitcoin. Again we see that financial institutions had an interest in preventing the expansion of this type of currencies.
And it is that in reality the laws were not ready to regulate this type of markets. However, since this type of currency has gained popularity among people, governments have ended up accepting the use of this type of currency. And they have tried to regulate their behavior with reference to the physical world. And that's how today, bitcoin markets are worth millions of dollars.
Now that we have better understood what a virtual currency is and how this currency has been regulated and popularized, let's get to know a little more about the various currencies that exist, starting with bitcoin, undoubtedly the most popular.
Bitcoin
The Bitcoin It is the currency that has had the most acceptance by the general public; this coin was born in 2008. And we owe its existence to Satoshi Nakamoto, whose contributions arose the idea for this currency to come into existence.
Something very curious about this coin is that although almost anyone with the necessary knowledge can create one of these coins, it is something that over time becomes more complicated due to the fact that both the algorithms and the mining that must be implemented is more complex.
It should be noted that this cryptocurrency was the first to emerge and its code is quite complex, however, when its source code was released so that it became part of the free software community, other alternative currencies emerged.
Peercoin
The PPCoin was created by Scott Nadal and Sunny King; The important thing about this coin is that it was the first to combine proof of status and proof of work, which implies that PeerCoin consumes less energy, so there is no limited number of coins that can be created. This difference from Bitcoin gives it a considerable competitive advantage.
Ripple
This coin is quite interesting because it makes use of a protocol other than bitcoins, which allows it to be a distributed currency exchange, which is also a payment method, and at the same time it is a virtual currency. This versatility allows it to have many functional advantages to be able to make a greater number of movements.
Litecoin
Finally, we will mention the second most popular virtual currency, Litecoin; This coin was created in 2011 by Charlie Lee, and given the popularity of this coin, he is considered the second best Bitcoin programmer. But despite being the second most popular currency, it has some advantages over Bitcoin, because as proof of work it uses some scripts that can be decoded by practically the CPU. Due to this, it has a much more agile generation of blocks than bitcoin. It is important to mention that it is currently valued at 201.8 million dollars.