virtual currency


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virtual currency,

a means of payment that is electronically created and stored, more specifically an unregulated electronic medium of exchange that operates like a currency but is created and controlled by computer software; also called digital currency. Virtual currencies generally are not backed by a national government and are not considered legal tender (Ecuador introduced a government-controlled electronic currency in 2015, and Venezuela announced in 2017 that it would introduce a digital currency backed by its petroleum and mineral reserves, mainly to provide the financially distressed government with a means for making foreign payments). They range from those used by gamers in online multiplayer games to Bitcoin and other digital currencies that seek to replace or supplement existing legal tender as a medium of exchange.

Bitcoin, launched in 2009, is an electronic currency that uses cryptographic software and a peer-to-peer computer network to generate the currency and record transactions in it; because of this it is classed as a cryptocurrency. The best-known and most widely circulated virtual currency, Bitcoin allows its users to make online payments that are not subject to government or bank scrutiny, which has led law enforcement officials to express concerns over its potential or actual use in bypassing currency controls, in money laundering, and in financing terrorist or criminal activities. Unlike money stored in bank accounts or credit cards used to transactions, Bitcoin is subject to limited protections and regulations; it is not governed or supervised by any central authority.

Bitcoin saw a slowly increasing acceptance by merchants as a means of payment, and in 2015 the establishment of a debit card that could be linked to a Bitcoin account allowed the virtual currency to be used to pay merchants who do not accept Bitcoin. Bitcoin, however, also has been subject to speculation on exchanges where it is traded, which has led to significant fluctuations in its value at times, including an enormous spike in its value in 2013 and again in 2017. Such volatility led critics to question Bitcoin's utility and viability as a currency. The dramatic jump in its value in 2017 especially made it apparent that it had become a speculative investment, more like a security or commodity than a currency. Critics have also questioned the ability of any virtual currency to act as a medium of exchange when there is, as is true of Bitcoin, a cap on the number of currency units that can be created using the software. Other limitations slowed the process of recording transactions as use of Bitcoin increased, leading to the development of an alternative, Bitcoin Cash, that split off from Bitcoin in 2017.

Governments have generally not treated Bitcoin as a form of money but as property or a commodity; some governments have sought to ban the use of it because of its potential for evading currency controls and government scrutiny. In 2014 Bitcoin software was revealed to have a computer bug that subjected it to attack by computer hackers and theft; the bug led to the bankruptcy of the largest Bitcoin exchange at the time. Another exchange had a security breach and suffered a large loss in 2016. Bitcoin can also be stolen through the theft of the private cryptographic keys used to identify ownership of the currency and through other means. The increased valuation of Bitcoin has spawned many other, mostly speculative and volatile cryptocurrencies, but some of them have won a degree of acceptance as a means of payment.

virtual currency

Electronic money. The term is often applied to Bitcoin; however, it may also refer to simulated money used in games or any currency stored in a computer. See Bitcoin and digital wallet.
References in periodicals archive ?
Due to its anonymous or pseudonymous character, law enforcement agencies may encounter difficulty in tracing the user or owner of a virtual currency used in the commission of crimes, thereby necessitating a higher penalty for its use," she added.
Authorities should also block domestic and foreign websites and close mobile apps that provide centralized virtual currency trading services to Chinese users, and sanction platforms that provide virtual currency payment services, Pan said.
Dubai: The Abu Dhabi Global Market said its regulatory authority, the Financial Services Regulatory Authority (FSRA), is reviewing and considering the development of a regulatory framework to regulate and supervise activities of virtual currency exchanges and intermediaries.
Given the anonymous and cross-border nature of virtual currency transactions, they are particularly vulnerable to money laundering and terrorist financing risks, as well as other financial crimes.
Finance minister, Taro Aso, said, 'We have started to raid several virtual currency exchanges.
Speculation has been rampant about the North's continued attacks on the virtual currency market.
The Jan 26 hack appears to be the largest cryptocurrency theft ever, exceeding even the $480m stolen in 2014 from another Japanese virtual currency exchange, MtGox.
The announcement follows a massive $530 million heist of cryptocurrency last week from Japanese virtual currency exchange Coincheck.
An ICO is the first sale and issuance of a new virtual currency to the public usually for the purpose of raising capital for start-up companies or funding independent projects.
and its creators Randall Crater and Mark Gillespie with commodity fraud and misappropriation of funds relating to the virtual currency called My Big Coin (MBC).
Having been granted a Payment Institution (PI) license to operate in the European Union it has become the first Bitcoin exchange to be regulated in Japan, the US and Europe, making it the most compliant virtual currency exchange in the world.
Despite the hysteria surrounding the virtual currency, Bitcoin has endured a choppy ride since the end of 2017.

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