1. Virtual Currency Virtual currency refers to any currency that is not printed on paper or metal, so it is virtual and exists only in the virtual world. In 2014, the European Banking Authority (EBA) defined virtual currency as: "Virtual currency is a digital expression of value that is not issued by a central bank or public authority, nor is it necessarily linked to a legal currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically." Therefore, Tencent's Q coin is a centralized virtual currency: it is issued and managed by Tencent itself, and can be recharged through WeChat payment, bank cards, etc., and purchased at a ratio of 1Q coin/RMB. It can only be used to purchase products (such as game props) and services on the QQ platform, and can only be circulated in one direction, that is, it cannot be exchanged for cash or transferred. Similar to this are points in online games, fish balls on live broadcast platforms, and gold beans on e-commerce platforms, all of which belong to the category of virtual currency. Virtual currency is generally issued by network operators, the number of issuance is determined by the issuing entity, and the credit guarantee comes from the brand credit of the operator. The issuance quantity and pricing can be changed at any time, and it can only be circulated in one direction in a certain scenario. So to a certain extent, this type of virtual currency is more like a "toy". But from the definition, virtual currency has the largest scope. Bitcoin can also be regarded as a decentralized virtual currency, but it is essentially different from Q coins and game coupons. For example, it is not controlled by any centralized organization, can be used to purchase certain goods and services, and can be exchanged with legal currency in both directions. Therefore, it is more accurate to define Bitcoin as an encrypted (digital) currency. Therefore, some people in the domestic securities industry believe that virtual currency only refers to Q coins and does not include encrypted (digital) currencies such as Bitcoin.

2. Digital currency The definition of digital currency has the biggest differences, but the unified part is: a currency presented in digital form, rather than physical currency such as paper money and coins, which assumes functions similar to physical currency, but can support instant transactions and ownership transfer without geographical restrictions. Digital currency includes encrypted (digital) currency and central bank digital currency, which is also the source of differences. Some domestic authoritative institutions believe that only digital currency with legal status issued by the central bank is the real digital currency. Li Lihui, head of the blockchain working group of the China Internet Finance Association, said in an article published on September 18 last year that "digital currency must have legal status, national sovereign endorsement, and clear issuing responsible entities. Virtual currencies represented by Bitcoin and Ethereum have no country, no sovereign endorsement, no qualified issuing entity, and no national credit support. These are not digital currencies." Note that digital currency is a real currency in the digital world. Unlike Alipay, WeChat, and mobile bank transfers, these are payment methods based on electronic accounts. In essence, they are just the information process of existing legal currency. This category is more accurately called electronic currency, but it is also considered digital currency in a broad sense. The real (narrow sense) central bank digital currency is still in the research stage. In the future, it will be used simultaneously with the existing legal currency and will gradually replace cash.

3. Cryptocurrency Cryptocurrency is a digital currency created based on a certain encryption algorithm, so it is better to call it encrypted digital currency. Cryptocurrency is not issued by any centralized institution. In theory, it will not be affected by interference and control by government departments. Bitcoin, Ethereum, EOS and other currencies currently circulating in the currency circle are all cryptocurrencies. One of the main goals of cryptography is secure data exchange. Cryptography creates and analyzes algorithms and protocols so that the transmitted information will not be changed or destroyed by third parties. Cryptography combines various scientific principles, mainly mathematics, which provides the accuracy and reliability of algorithms and protocols. The "encryption" of cryptocurrency is relative to "non-encryption". Non-encrypted digital currency is a centralized digital currency. The number of issuances is determined by the issuing entity. There is a group of people and a computer network that monitors network transactions. The transactions are supervised by centralized institutions, and the wallet address and transaction information are not disclosed to the public. The digital currency or virtual currency issued by a company or country is of this type. The distributed accounting system adopted by cryptocurrency has a consensus mechanism formulated by most users in the community, which has good privacy protection for users, but the transaction information is completely open and transparent, and the transaction rules will not be changed by an institution or individual without authorization, and are supervised by all members. Therefore, the various currencies in the field of blockchain investment are accurately positioned as encrypted (digital) currencies. The digital currencies that the public pays attention to and discusses, whether it is about Bitcoin, ICO, or the digital currencies that central banks of various countries are concerned about and exploring, are actually encrypted currencies.