What is virtual currency?

I would like to explain the basics of virtual currency and the important points to keep in mind as easily as possible.

What is virtual currency

What is virtual currency?

(Alternative name: Cryptocurrency English: cryptocurrency, virtual currency)

❝Virtual currency is a currency whose value is not guaranteed by a specific country compared to currencies such as the US dollar, euro, and Japanese yen.

As of 2018, currencies (=cryptocurrencies) that are electronically issued using cryptographic theory, such as Bitcoin, are widely known.

Electronic money is a substitute currency managed by companies that have specific trust or are legally forced to trust, whereas virtual currency is money that is widely exchanged among a certain community without any special restrictions. different . ❞ wikipedia

It’s clearly put together well, but it’s a little hard to understand and I can’t get a good idea of ​​what it is.
Let me break it down a little and explain it in an easy-to-understand way.

❝Virtual currency is money that does not have a guarantee of value by a specific country, unlike currencies such as the US dollar, euro, and Japanese yen.❞

There is no national guarantee, and there are those who feel uneasy when they hear this, and those who do not. Japan’s legal currency, the yen, is stable and reliable, so I think many people feel uneasy when they hear that there is no national guarantee.

However, there are many countries around the world that have gone bankrupt and the money they issue is nothing more than a piece of paper. One of the reasons why virtual currencies attracted attention was the news that when Greece suffered a financial collapse, Greek citizens bought virtual currencies (mainly Bitcoin) to protect their assets. Therefore, the lack of national guarantees is not just a cause for concern.

There is also a way to think of countries as large companies and to invest in virtual currencies as a way to diversify the risk of assets.

But why is it so valuable?

There are many people who have doubts about this. To put it simply, there are two main reasons.

✔First reason:

It’s a new technology. There are now various types of virtual currency. However, they are mainly not just currencies, but currencies used in each new business (project). Therefore, the idea is very similar to investing in stocks that will grow in the future. We are investing and speculating in coins issued by projects that are expected to grow virtual currency.

[Project examples]
Bitcoin: Ledger management using blockchain Ethereum
: Smart contract
Ripple: Payment/remittance system

✔Second reason:

Unlike banknotes, which are issued by the government indefinitely, there is a limit to the number of coins that can be issued. (There are also transfers without an upper limit.)

This time, I will talk about Bitcoin as an example of a representative virtual currency.
Bitcoin is often compared to gold or platinum.

Gold and platinum are also traded at high prices as financial products, but they are not created by just anyone.

It is said that the absolute amount on Earth is fixed. The same is true for Bitcoin; the total amount issued is predetermined, and is said to reach 21 million BTC (the upper limit) by 2140.

No new copies will be issued after that. It is said that there is no risk of causing inflation because the number of issued coins is fixed.

Therefore, when speculating in virtual currencies, one important point to consider is whether there is a limit to the number of issued stocks, so be sure to limit your speculation.

This cryptographic theory is a new technology called Boolock Chain, which is attracting attention.

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