A virtual currency is a type of money that has a value and purchasing power, like paper or coins, but can only be used in a virtual environment and cannot be physically “handled”. Electronic money is also called virtual currency, digital currency or electronic currency.
The features and structure of digital currencies provide users with high transaction speed and ease of transaction. Money that can be paid online in electronic environments can only be used by people in these environments. It is possible to pay bills, transfer money or make purchases using digital money. The encrypted structures of digital currencies, which use computer files instead of paper, are more secure than traditional currencies. One of the examples of digital money, which is much more difficult to copy and steal than traditional currencies, is money in bank accounts.
Virtual currency can be transferred from user to user. It can be stored in various devices such as wallet or cloud. Virtual currencies are not regulated by any bank or public authority. Therefore, it has nothing to do with any traditional currencies. Developers regulate and control virtual money. Each virtual unit developed has a unique algorithm. The blockchain technology used creates these virtual currencies.
You can also buy games and music online with virtual money around the world. In some countries around the world, virtual currency payments are made in restaurants, bars and hotels.
What Are Virtual Currencies?
Recently, interest in virtual currencies has increased and investment has shifted to these areas.
Virtual currencies are known as BTC, USDT, SOL, XRP, DOGE, AVAX, ETH, ADA, USDC, LTC, XLM, DAI, HBAR, FTT, XTZ, XMR, MATIC, EOS.
There are three main types of virtual currencies:
Convertible currency, closed currency, peer-to-peer currency. Cryptocurrency exchanges and Bitcoin ATMs (only available in a few countries) are mediums of exchange for convertible currency.
The closed currency exists only in virtual communities and has no connection to the real economy.
Peer-to-peer currency refers to the exchange of currencies not established by a central banking authority. A particularly common application is through cryptocurrencies such as Bitcoin. Virtual currencies are transferred electronically between parties. Peer-to-peer exchanges allow individuals to move currencies from their account to someone else’s without the need to go to a financial institution. P2P networks rely on digital transmissions, which in turn depend on the availability of the internet connection.
Advantages of Virtual Currency
The advantages of virtual money are as follows:
- Virtual currencies do not have any costs, as there are no expenses such as raw materials and printing.
- The payment process for purchases made with virtual money is faster and more practical as approval from a third party is not expected.
- A third party commission, service fee, etc. Since it is not paid, there is no cost in virtual currency payments.
- It is a transparent system as all transactions made with virtual currencies are recorded in the virtual environment.
