Virtual currency is a technology that helps in processing payments. This currency can be transferred from user to user. It can be stored in various devices such as wallets or on cloud. The currency is tradable. Virtual currency is a form of digital coin or electronic currency. Digital currency and virtual coin are two separate entities. Thus, they cannot be used interchangeably.
This currency is not issued by any bank or public authority. Thus, it has also nothing to do with traditional currency or flat currency. Developers issue and control the virtual money. Every virtual currency developed has its own unique algorithm. Blockchain technology create this currency.
It’s customizable for both inflation and deflation. Thus, making it almost independent of centralized policies. Not all of these virtual currencies have market value. It would take some more time to eliminate traditional currency system completely. The era of digital money or virtual currency definitely has a promising future.
Types of Virtual currency
There are three major types of virtual currency i.e. Convertible currency, closed currency, peer-to-peer currency. Exchange and Bitcoin ATM’s (available in few countries only) are the mediums of exchange for convertible currency. Closed currency exists only in virtual communities and has no link to real economy. Virtual communities are mostly online gaming platforms.
Some of the most renowned platforms such as World of Warcraft, EVE online, second life are virtual communities. Peer-to-peer currency involves direct transfer with involving a third party. Therefore, it’s an independent entity.
Currently, there are many virtual currencies such as Peercoin that are flowing in the market. Most of them are cryptocurrencies. Bitcoin has been the most successful virtual currency so far. It is the most popular currency for market capitalization holding 90% of the total market. Litecoin, Dogecoin, Primecoin & Peercoin are some of the other virtual currencies in the virtual community.