What is a virtual currency?
Virtual currency can be defined as a type of electronic currency, which holds a monetary value which is issued and controlled by private developers, founding organizations and private issuers. Virtual currency is basically not controlled by the system of central banking authority. It is mainly in the digital form issued by digital banks. It is represented in terms of tokens without a legal tender. Unlike other currencies, virtual currency has restricted usage and its transaction takes place between groups of online communities who transact through a dedicated network. Virtual currency transaction totally depends upon the trust of customers and issuers as many network issues can also occur during the transaction of such currency, which can cause an unexpected deduction of the amount of their digital money. It transfers from user to user. Such currency is the technology of digital mode of payment which is stored either in a digital wallet or in the cloud. It can also be referred to as a digital coin. For more information visit https://www.cornucp.com/.
What are the types of virtual currency?
Basically, there are three types of virtual currency-
1. Convertible currency- Some exchange and Bitcoins available in some countries are included in convertible currencies which are considered as a medium of exchange.
2. Closed currency- The type currency which only exists in virtual communities. These currencies do not have any link to the real economy, especially the virtual communities including online gaming.
3. Peer to peer currency- The type of currency, which involves direct transfers of payment with the involvement of a third-party that’s why it is considered as an independent entity.
What are the uses of virtual currency?
Virtual currency is generally considered as a digital mode of payment which is normally used by many people nowadays for their ease of convenience.
1. Virtual currency is basically used for payment of selling or buying of goods on a digitalized base which limits its transaction to certain borders of an online community.
2. It can also be decentralized over an emission process and converted into liquid assets for further convenience.
3. Including Crypto-currencies in virtual currency, it is used as a speculation tool for its volatility.
4. Virtual currency users willing to include themselves in an online community for making their money transactions digital.
5. Even though, besides the usage of this currency there are some drawbacks as it is not accepted by other banks and is not included in the central authority system.
Benefits and risks of virtual currency
1. Virtual currency is even though very useful and convenient but it also has some drawbacks. The transactions held under virtual currency are cheaper, faster and more secure due to its risky nature.
Risk also comes under this process as it can lead to various kinds of cyber threats such as hacking and theft loss to the consumer. It also risks some kind of stability for this type of platform.
2. As its transactions are processed anonymously, this also leads to some illegal trading. Even though the ownership of virtual currency is public it allows analysis for these transactions.
3. Virtual currency mainly receives more importance for online retailers, as it helps their business to expand, but it can also lead to some fraud online companies which can cause loss to the online customers.
4. It invests in financial services such as Bitcoins which supports the technology of global commerce. Since Bitcoins doesn’t rely on intermediaries it has clear potential for growth in the business.
5. It is also emerging as a popular electronic digital payment which lowers the costs of business transactions.
6. It is considered to be global because of its cybernetic money as it provides a platform for international trading for many users.
As we all have concluded from the above article that a coin has two sides – advantages and disadvantages, as the same as the virtual currency has its own benefits and risks. The Virtual coin vce considered as Bitcoins which proves to be very useful for the financial digital banks. It contains a very huge amount of liquidity, another type compared to other types of currencies. It helps to maintain a balance between the exchanges of fiat currencies. It is accepted as a form of payment for various goods of higher value. It is possible in some countries to purchase certain goods by Bitcoins on daily activities.
Since virtual currency or digital currency makes our life a lot easier by going for cashless transactions for any kind of inconvenience. But it also requires a lot of trust and security issues related to these transactions. Also, due to its lack of regulation from central authority, it contains wide swings, in its valuation. Now at last, but not the least, any kind of payment must be of legal validation from the government for avoiding any kind of trouble in future.