Virtual currency is a form of exchange that acts as a currency but is created and controlled by computer programs. Some virtual currencies have the potential to become the common currencies of countries, while others flow only in a virtual community. 

Virtual currencies are mutually convertible from/to the regulatory currencies of countries regulated by countries. Before the advent of bitcoin, virtual currencies were usually controlled by a central entity.

But with the advent of bitcoin came virtual currencies that did not have a central administrator and used cryptography to control their new units.

Phenomena like bitcoin are conceptualized using different terms such as cryptocurrencies and digital currency, but from the legal terminology of virtual currency, it is a common term for policy-making.

Cryptocurrency

Cryptocurrency is a type of virtual currency that uses cryptographic technology in its design and is usually centrally managed. Cryptocurrencies are usually centrally controlled and are therefore opposed to centralized banking systems. Decentralization in cryptocurrencies is made possible by blockchain technology, which is itself distributed in the general office.

The history of cryptocurrencies dates back to the 1980s.

The first decentralized bitcoin cryptocurrency was created and released in 2009 by a person nicknamed Satoshi Nakamoto. Since then, several cryptocurrencies have been created, many of which are also referred to as “bitcoin replacement coins”.

Cryptocurrencies (or cryptocurrencies, or cryptocurrencies) are forms of digital money in which the production of a currency and the authentication of a money transaction are controlled using encryption algorithms and usually operate decentrally (without dependence on a central bank).

Due to the multiplicity of definitions and changes in common examples of Crypto, this phrase is not legally accurate enough.

The Oxford Glossary first defined cryptocurrencies in 2014, using cryptographic techniques to determine the rules for generating new currencies and verifying funds transfers, and is independent of a central bank, but today any electronic money system is used for buying and selling online and does not require a central bank, Crypto defines.

Because cryptocurrencies are centrally administered, they undermine countries’ power to control the economy (usually through the central bank).

This is considered a positive feature by some crypto lovers, but a negative feature by some governments.

Also, the encrypted nature of cryptocurrency transactions makes it difficult or impossible to track these transactions, which some critics believe provides a good basis for using cryptocurrencies for money laundering.

Many cryptographers use algorithms to extract new money or record proof of work or deduct transaction costs based on sophisticated cryptographic methods. Usually, these algorithms become more and more difficult as users try to extract passwords or gain transaction rights, and solving them will require more complex and time-consuming computer calculations.

This leads to a large amount of electricity consumption, which has also been criticized by critics.

Proponents of cryptocurrencies, on the other hand, point out that conventional banking also consumes a lot of resources and energy, and provide calculations that show that cryptocurrencies are therefore less expensive than conventional banking.

Another argument of cryptocurrencies is that more energy is now wasted by devices that are left on, as their one-year power consumption is enough to power four years of the entire bitcoin network.

With the widespread use of cryptocurrencies, the amount of electricity consumed to extract them has also increased significantly, as in 2018 it was predicted that the amount of electricity that Iceland consumes cryptocurrencies this year will be more than the amount of electricity used for home use.

In some countries, governments have set tax rates that are specific to electricity consumption for cryptocurrencies.

Electronic money

In recent years, consumers have shown a strong desire to conduct electronic exchanges. Reducing the cost and increasing the speed of Internet access and the economic and social benefits of e-commerce are the main reasons why people pay attention to such exchanges. E-commerce is a term used for business through information-communication systems.

In fact, e-money is a mechanism for paying stored or prepaid value in which an amount of funds or value that can be used by the consumer is stored in an electronic device and part and held by the customer.

Features of electronic payment systems

Security: Securing information means preventing unauthorized access to and access to information

Divisibility: Most sellers only accept credit cards for minimum and maximum domains, so the higher the acceptance range, the more likely it is to be accepted.

Ability to check: The system should record all financial transactions so that possible bugs and errors can be tracked if necessary

Reliability: The system must be strong enough so that users do not lose money in the event of a power outage.

Anonymity: This is a matter of privacy, meaning that some buyers tend to remain anonymous about their purchases.

Non-Denial: An online payment system should reassure and engage the groups involved that a group can not deny or illegally trade transactions.

Digital currency

Digital currencies are currencies that are stored and transmitted electronically and are based on zero and one. As the word implies, digital currency refers to any value created in the digital context. This concept is presented in the face of physical intermediaries such as banknotes or coins.

The digital currency has similar properties to physical currencies, but digital currency capital transfers are usually instantaneous and borderless.

Virtual currencies and cryptocurrencies are both examples of digital currencies, but not every digital currency is a virtual currency or cryptocurrency. Digital currencies, like physical currencies, are used to buy goods and services but can also be limited to use in certain forums.

For example, you can have a virtual currency for a game or social network. Digital currencies such as Bitcoin and Atrium are known as “decentralized digital currencies”; Which means that there is no center to produce this money.

Crypto Exchange

A cryptocurrency exchange or digital currency exchange is a business that allows customers to exchange cryptocurrencies or digital currencies with other assets such as conventional unsupported currencies or other digital currencies.

A cryptocurrency exchange can be a marketer who usually takes the bid-ask price gap as a transaction commission for a service or service fee. Digital currency exchange can be a brick-and-mortar business.

Or just an online business. In the trading mode, exchange mortar replaces traditional exchange methods with digital currencies. In online business, it exchanges electronically sent currencies for digital currencies.

Most digital currency exchanges operate outside of Western countries to avoid regulation and prosecution.

Electronic money

It is now accepted that e-banking can be divided into two distinct streams: one is electronic money products, especially in the form of products that store value, and the other is electronic delivery or access to products. These are products that allow the consumer to use electronic means of communication and thus access contract payment services.

For example:

using a personal computer or computer network (such as the Internet) to pay for an electronic card or sending an order to transfer funds between bank accounts.

Because e-money is still in its infancy, there is still no single definition of e-money, and different people have defined and explained e-money in different ways. The European Union has described e-money in its draft guidelines as follows:

The US Consumer Adviser has described e-money as:

money that travels and circulates electronically and can be presented as smart cards or value-added cards, or e-wallets.

It can also be used in the sales terminal or without the intervention of any other person and directly to the person and can also be moved or spent through telephone lines to banks or other service providers or exporters (electronic money)…

Features of e-money

The value is stored electronically on the piece or device. Different products are technically different. In card-based e-money, a piece of computer hardware that is dedicated and portable and typically a microprocessor is embedded in a plastic card, while in software-based e-money, it is a specialized piece of software on a personal computer. Installed, used.

The value of e-money is transmitted electronically in several ways.

Some types of e-money allow the transfer of electronic balances directly from one consumer to another without the intervention of a third party (such as the issuer of e-money), and what is more common is that only authorized and possible payments are paid from the consumer to Merchant as well as the possibility of repurchasing the value of electronic money for merchants.

Transferability is limited to transactions that have a history of being recorded. In most product methods and procedures, some details of the transaction between the trader and the consumer are recorded in a central database that can be displayed and presented.

In cases where transactions are possible directly between consumers, this information is recorded on the consumer’s personal device and can only be displayed and presented through the central device if the consumer has concluded a contract through the operator (design agent) of electronic money.

The number of partners and parties that are effectively involved in e-money transactions is much higher than the number of contract transactions.

There are generally four categories of people involved in e-money trading:

the issuer of the value of e-money, the network operator, the seller of special hardware and software, the transmitter, and the settler of e-money transactions. The e-money issuer is the most important of these, while the network operator and the vendor are the technical service providers, and the e-money transfer and settlement institutions are banks or corporate entities that provide services similar to those provided to others.

Cashless payment tools are also available. Technical barriers and human error can make trading difficult or impossible, whereas in paper-based trading there is no such problem.

Types of electronic money

Electronic money is divided into different ways, in one of the divisions, electronic money is divided into two categories:

Electronic money detected

This type of e-money contains information about the identity of its owner, which is somewhat like a credit card. These currencies are traceable and the identity of the holder can be identified. The usability of this money is possible in two ways, continuous and discontinuous.

Unidentified electronic money (anonymous and badge)

This type of digital money has the property of concealing the identity of its owner, and in this respect works just like traditional paper money.

Once digital money is withdrawn from an account, it can be spent without leaving any trace, and because when creating digital money, unspecified signatures are used, no bank can track it.

Each of these electronic currencies is divided into two categories: online electronic money and discontinuous electronic money.