Bitcoin illustration by leolintang/Depositphotos.com
The virtual currency industry is growing bigger and bigger every day. It’s hard to keep up with all the new terms and words that pop up and get invented to try to describe all that is happening in this red hot industry. Especially now that giant companies, like the JP Morgan, are hopping into the bandwagon and are releasing their own coin.
According to JP Morgan, their new coin is not virtual money or even cryptocurrency. It will only be available in their bank and will be used to reinvent processes that happen inside the bank, sort of like bonds and stocks.
Your quick and easy guide to virtual currency terms and their proper usage:
If you’re not that familiar with all the terms that have been flying around this article, don’t fret. Read until the end to get better acquainted with all the new terms in the virtual currency industry. It’s a good guide would help you get ready for when you start diving into the cryptocurrency industry.
What do people mean when they say Digital currency?
When you hear the word digital currency, think of Paypal. That term is the umbrella term for all money transactions that happen without the need for actual, physical money. You can use them to buy good, pay for professional services, or pay for tickets and video games. Basically, it’s money that you do have but on the computer and not physically in your hand.
You can get them either by having your physical money converted to digital or by having someone send them to your account from theirs.
You can manage them through specific websites or applications. Paypal is one of these sites. It allows you to send and receive money to and from other users. It also allows you to convert your money to whatever currency you want them to be. You only need virtual wallets and an email to make all of it happen.
Online transactions like these often only last minutes. There’s no waiting time needed. When you send the money, it would reflect on the other person’s account almost instantly. They can immediately use that money to buy foods and services online. It’s just as good as cash, only you can’t touch it.
These intermediaries have been around for a long time. They’ve polished their processes and redesigned their forms repeatedly over the years to improve customer experience and make the transactions feel like a breeze, which it does. This system is fast and incredibly comfortable.
Imagine physically sending a million dollars to someone abroad. It would be stressful and nerve-wracking. With virtual currency, you could do it in minutes. It’s incredibly secure. There’s no need to worry about your money’s safety.
So how’s that different from Virtual currency?
If digital currency is the umbrella term, then the virtual currency is one of the terms underneath it. Virtual currency is the “money” that’s used in a certain platform. You can transfer it to other people and get some from them too. It depends on the platform, sometimes you can even convert them to real money.
Virtual currencies are not accepted everywhere. There are only a number of places that will agree to transact with you using them. They are usually only good to use on the platform where you get them.
For example, games like Runescape and Warband have their own money. You can earn those through various ways and can use them to avail of goods and service on those games. However, those money’s don’t translate to real life. Even if you have millions there, you can never get them out of the game and convert them to physical money.
In the real world, they’re useless. They have zero values, and you could never get anything with them.
You could, however, use actual cash to get these virtual currencies. You can pay actual money and have it translated into the game, but you won’t be getting it back. That would permanently stay in there forever.
And what about Cryptocurrency?
Cryptocurrency is another type of currency used in online transactions and virtual payments. Because of its growing influence, it’s now accepted by certain establishments and individuals as payment for goods and services.
These currency functions on its own. It’s not regulated by physical establishments or any real bank in the world. It has its own algorithm called blockchain that determines its value based on how in demand it is and how much more supply is there in the world.
You can convert them to other virtual tokens like ethereum. Most people just store it and wait for its price to spike up before selling them. That’s what it’s mostly used for nowadays.
There are people who do this professionally. They buy the tokens, wait until the value goes up, and then they sell it for a higher price. Their value is huge only because people believe that they’ll be worth much bigger in the future, and so they hoard it now.
You might have heard of Bitcoin. It’s the most famous form of cryptocurrency. It’s also the first and the oldest. You have to be careful when dealing with tokens like these. There are so many of them on the net right now that some of them aren’t even worth anything. Plenty of them aren’t even legit. Although there are some which are legit, you need to do plenty of research before entering any kind of investment and negotiation with these kinds of tokens. Make sure you understand what you’re getting into before agreeing to anything.
The world is years away from getting comfortable with all of these terms. Still, it’s a great advantage to know what each of them is and how to use them. You never know what the future might bring. Maybe they really will be worth much more in the future. Investing is always a gamble. At least, now that you know how it goes, you can thrust into that venture better informed.
Just always exercise caution when dealing with these currencies. Good luck and may you have all the success in the world in your future endeavors.