Welcome to Hard Fork Basics, a collection of tips, tricks, guides and tips to keep you up to date with the latest news from the world of cryptocurrency and blockchain.
The world of cryptocurrency is extremely complex. The best case scenario, but last week things got even more complicated whenJPMorgan announced the launch of its own coin, which many said was a digital currency – perhaps a stablecoin – but most certainly not. a cryptocurrency.
With this in mind, Hard Fork is putting together an introductory book on the differences between cryptocurrencies, digital currencies, and virtual currencies – three terms often used indiscriminately, but not meaning the same thing. digital currencies
Digital currency is the umbrella term used to describe all electronic money, which includes both virtual currency and cryptocurrency. It may or may not be regulated.
It is only available in digital or electronic form and, unlike a dollar bill or coin, it is intangible. Digital currencies, which can only be owned and spent with e-wallets or connected networks, are also called digital currency or cyber-cash.
The absence of intermediaries means that transactions are usually instantaneous and generate little or no fees. If what critics say is true, JPMorgan’s coin, for example, would be considered a digital currency because it doesn’t operate in chains, it’s used online, and its use is to transfer funds between the financial giant and its customers. What about virtual currencies?
Virtual currencies are a type of digital currency, usually controlled by its creators and used and accepted by members of a specific virtual community.
. becomes a bit confusing: all virtual currencies are digital (they only exist online), butnot all digital currencies are virtual, as they exist outside of a specific virtual environment. .
Virtual currency is essentially a representation of the monetary value issued, managed and controlled by private issuers for the transaction of peer-to-peer payments. They are sometimes represented in terms of tokens and can be unregulated without legal tender, such as coins or banknotes.
Unlike fiat currency, virtual currency is not issued by a bank. This lack of regulation means that virtual currencies are subject to price fluctuations.
Cryptocurrencies such as Bitcoin and Ethereum are considered virtual currencies. So, what is a cryptocurrency?
The term “crypto” in “cryptocurrency” refers to the fact that many encryption algorithms and cryptographic techniques are used to ensure security on the network. This level of security also makes it difficult to counterfeit cryptocurrencies.
Many cryptocurrencies function as decentralized, blockchain-based systems, without the need for a trusted third party such as a central bank or credit card company. In this case, peer-to-peer transfers are facilitated by the use of private and public keys.
Bitcoin is undoubtedly the most well-known – and most widely used – blockchain-based cryptocurrency. It is also the most valuable, currently at $3,821 per coin.
Although Bitcoin is the most popular, it is not the only cryptocurrency. There are many alternatives, or altcoins, such as Litecoin and Monero. Some mimic Bitcoin, others are forks, or simply new cryptocurrencies that have split or derived from an existing one.
Due to their virtual nature, cryptocurrencies do not have a central repository, which means they can be erased. by a computer crash if there is no backup copy of the assets or if the user misplaces his private key.
Unlike cash, which is completely anonymous, transactions made with cryptocurrencies can, in the case of Bitcoin, be tracked in the blockchain without initially knowing the identity of the participants.
It should be noted, however, that some cryptocurrencies are less private than others. For example, Dash, ZCash, and Monero are much harder to locate than Bitcoin.
On the other hand, cryptocurrencies tend to be characterized by price volatility because their value is solely based on supply and demand. Summary of Findings
In summary,dDigital currency is the generic term used to refer to money that exists only in the digital space. Virtual currencies and cryptocurrencies are digital currencies because they exist online.
Virtual currencies are a form of digital currency available in the virtual world (think exclusive online communities created by developers).
Cryptocurrencies are digital currencies because they exist online, but they are also virtual currencies created with cryptographic algorithms.
So, even though we often see the terms digital, virtual, and cryptocurrency coded together, it’s important to understand the nuances between the three. Use them wisely!
Published on 19 February 2019 – 09:14 UTC