What is virtual currency (crypto currency)? Table of Contents
What is virtual currency (cryptocurrency)?
Virtual currency (cryptographic assets) is a currency that is exchanged only with electronic data and does not have compulsory currency (a legal effect used as a means of repayment of monetary debt) by the state like legal tender.
Mainly used for transactions on the Internet.
Also known as a digital currency.
Since the advent of Bitcoin, which started operation in 2009, derivative virtual currencies called altcoin have been born one after another, and virtual currency exchange called virtual currency exchange that exchanges fiat currency and virtual currency With the advent of traders, the holding of cryptocurrencies has expanded rapidly.
Types of virtual currencies include Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin, NEM, Ethereum Classic, LISK, etc., and the number is still increasing.
The mechanism of virtual currency is different from ordinary legal tender, and in many cases, there is no organization such as a state or a central bank to manage it.
A method called peer-to-peer (P2P: Peer to Peer) is adopted mainly by those who handle virtual currencies, and transaction information is managed between users.
Many virtual currencies have an upper limit on the number of issues, and the price fluctuates depending on the supply and demand for the circulation volume.
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What is the definition of virtual currency?
In general, the fund settlement method defines virtual currency as follows.
- When purchasing, borrowing, or receiving services, it can be used for unspecified persons to pay these prices and purchased and purchased with unspecified persons as the other party. A property value that can be sold (excluding fiat currency, foreign currency, and currency-denominated assets, as long as they are recorded electronically in electronic devices and other items. The same shall apply in the next item) and electronic. Items that can be transferred using an information processing organization.
- A property value that can be exchanged with the ones listed in the previous item against an unspecified person and that can be transferred using an electronic information processing organization.
Difference between virtual currency and fiat currency
Fiat currency
Fiat currency is issued and managed based on the credit of the public issuer, and has substance in the form of banknotes and coins, whereas most virtual currencies are publicly issued by utilizing blockchain technology.
It is distributed without the backing of the entity or administrator.
Electronic money
Electronic money is one of the payment services that enable electronic payment via the infrastructure of a third party.
General electronic money exists to make electronic payments using the Fiat currency of the home country.
Virtual Currency
On the other hand, virtual currencies are similar to electronic money in that they enable electronic payment without using banknotes or coins, but virtual currencies can be passed through a third party by using blockchain technology.
It has the advantage of being able to transfer value without having to.
Types of virtual currencies
It is said that there are more than 3000 types of crypto assets (virtual currencies) in circulation around the world.
Among them, there is some major Cryptocurrency (virtual currency) that are popularly traded.
1. Bitcoin (BTC)
Bitcoin is a virtual currency whose concept was presented in a paper published on the Internet by a person named “Satoshi Nakamoto” in 2008, and the operation was started in response to it.
By using blockchain, which is a technology for creating distributed ledgers, there is a feature that value can be stored and transferred via a network without the backing of a public issuer or administrator.
Bitcoin has the largest market capitalization among many virtual currencies, so it is no exaggeration to say that it is a representative of virtual currencies.
Many currencies are split or derived from Bitcoin and are the basis of virtual currencies.
2. Ethereum (ETH)
Introduced in July 2015, Ethereum is a cryptocurrency with the second-largest market capitalization after Bitcoin as of June 2018.
While Bitcoin specializes in managing transaction records using the blockchain, Ethereum is a “smart” that can automatically execute user-defined contracts without a public issuer or administrator.
The feature is that it can handle “contracts”.
Scalability problems are being solved by a new technology called Plasma, and specific methods are being discussed day and night.
3. Ethereum Classic (ETC)
Introduced in July 2016, Ethereum Classic is a cryptocurrency created by splitting Ethereum.
Like Ethereum, it also has the benefits of smart contracts.
The Ethereum Classic was launched by the Ethereum Foundation’s hard fork opponents and inherits the original Ethereum blockchain before the hard fork.
4. Litecoin (LTC)
Litecoin, which was introduced in October 2011, is a virtual currency created based on the Bitcoin system and has the features of short mining time and excellent storage efficiency.
The total amount of Litecoin issued is 84 million, which is about four times that of Bitcoin.
Litecoin has an average block generation time of 2.5 minutes and is trying to overcome the disadvantage of Bitcoin, the transfer time problem.
5. Bitcoin Cash (BCH)
Bitcoin Cash is a currency that was created by hard forking from Bitcoin in August 2017 and is a virtual currency that tried to overcome the scalability problem of Bitcoin by expanding the block size.
The block size is 32 times larger than that of Bitcoin, which also leads to a reduction in fees.
6. Monacoin (MONA)
Monacoin is a virtual currency that was conceived and created in January 2014 on the Japanese Internet bulletin board 2channel (currently 5channel).
It is said that the name comes from “Monor,” which is the ASCII art that originated in 2channel.
Monacoin is also the first cryptocurrency in the world to introduce a remittance processing system called SegWit, which solves the two problems of cryptocurrency, scalability and transaction expandability.
7. Risk (LSK)
Launched in May 2016, Risk is a decentralized application platform with smart contracts.
It is using JavaScript as the application language.
Risk is expected to solve the scalability problem by configuring the application for each sidechain separately from the core blockchain.
Conclusion (What is Cryptocurrency?)
Cryptocurrencies are a type of digital currency.
It can be used as consideration for goods and services among an unspecified number of people and companies via the Internet, and can also be exchanged for legal tender such as yen, dollars, euros, and won through specialized exchanges.
Cryptocurrencies are secured by using cryptographic technologies such as public-key cryptography and hash functions.
Transactions made are grouped into units called blocks, and the chain of blocks is called a blockchain.
This blockchain technology is used in most virtual currencies, and all transaction data stored on the blockchain is open and shared.
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