Usually we confuse virtual currency and cryptocurrency, especially many bloggers in the currency circle do not strictly distinguish the difference between the two when creating content.
For newbies, this may be a misunderstanding from the beginning.
First, virtual currencies.
Virtual currency exists electronically and has no physical entity. The earliest QQ coins and even the gold coins in the game are considered virtual currency. We now use virtual currency to pay every day. The money in the bank card is virtual currency as long as you do not use cash transactions.
This currency only circulates in an online environment.
What differentiates what we think of as cryptocurrencies is the underlying technology, blockchain.
Second, digital currency.
It is a digital currency issued by the state, such as the digital renminbi. The credit endorsement behind it is the state, and it has the same functions and legal status as legal currency.
The birth of digital currency is mainly because with the development of society, circulation has become faster and faster, and the requirements for convenience, efficiency, and security are particularly high. Digital currency can fully satisfy these three.
Third, cryptocurrency
Cryptocurrency is what we are familiar with. Bitcoin, Ethereum, altcoins, junk coins, and Dogecoin all belong to the category of cryptocurrency.
All you need to remember about cryptocurrency is encrypted distributed accounting technology.
Encryption involves cryptography, distribution is the network, and accounting technology is finance. Therefore, the first area where cryptocurrency will revolutionize must be the financial field.
The biggest feature of cryptocurrency is anarchy. It does not rely on any centralized institution or government endorsement. It has a market that determines its own price and circulates freely around the world. If humans conquer the universe, it can also circulate throughout the universe.
Every transaction in cryptocurrency is clearly recorded on the chain, and all transactions form a chain in chronological order, so it is commonly known as the blockchain.
Cryptocurrency makes it possible for us to control our own wealth. In a centralized world, your money is not necessarily yours. If you are in some small and unstable countries, your money may become a piece of paper with the collapse of the government. Blank paper.
Finally, how do you differentiate between cryptocurrencies, digital currencies, and virtual currencies? You can refer to the following 4 points:
First. Issuing institution and value support
Second, circulation scope
Third, transaction characteristics
Fourth, supervision and law
Virtual currency is a virtual platform and game operator, digital currency is a country and central bank, and is regulated and protected by law, while cryptocurrency relies on blockchain technology and is not subject to centralized supervision and control, and is naturally government-antagonistic. Therefore, it has been rejected by many countries.
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