Cryptocurrency is a kind of valuable digital currency that can be exchanged on the Internet. It is defined as follows in the Fund Settlement Law.
・ As a currency, you can pay to unspecified people.
・ You can buy and sell virtual currency itself.
・ It is not a legal tender or an asset that substitutes for legal tender (prepaid card, etc.).
・ Electronically recorded and transferred.
・ Can be exchanged for legal tender (money permitted by law).
Virtual currency has two characteristics.
- Exists as a digital currency
- Not issued by a particular nation
And from here, let’s think about what a virtual currency is in a little more detail. The point here is that virtual currencies are “non-centralized currencies” and “utilize block chain technology . “
Difference from legal tender:
Legal tender is a currency that is recognized by national law. Canadian Dollar, US Dollar, etc. are listed as legal tender.
There is no issuing / managing entity in virtual currency
Legal tender is issued and managed based on the credit of the central banks (public issuing institutions) of each country. In other words, if the credit of a country goes down, so does the value of the currency. On the other hand, in the case of virtual currency, there are exceptions, but there is no issuer. Instead, a technology called block chain is used. This preserves the credibility of the currency even if there is no governing entity.
Cryptocurrency itself has no substance
Legal tender has some entities such as banknotes and coins that can be picked up, but virtual currencies are intangible, encrypted data. English name of the virtual currency is a “Cryptocurrency”, literally encryption currency will be. It is an image of handling encrypted money on the network.
Cryptocurrency has an issuance limit (with some exceptions)
The volume of legal tender in circulation changes depending on monetary policy. Monetary easing by the central bank will increase the circulation of money, and austerity will reduce it. Public institutions intervene in circulation to stabilize the value of the currency. On the other hand, cryptocurrencies generally do not have an issuer, so certain institutions do not intentionally change the issuance amount and adjust the price.
For this reason, some currencies have an upper limit on the number of issuances so that the amount of currency circulation does not increase too much and the price does not fall. For example, Bitcoin has an upper limit of 21 million. (* Some virtual currencies have no issuance limit.)
Virtual currency is convenient for remittance
Cryptocurrencies are also attracting attention as a means to solve the problems of legal tender. For example, when you try to transfer money to an overseas account, you may have to pay a fee to go through a financial institution if it is legal tender, exchange Japanese yen to foreign currency, and wait several days until the transfer is completed.
On the other hand, with virtual currency, you can send money directly to the other party’s account, so you can usually send money and make payments with a small fee without exchanging money. In addition, transactions can be conducted 24 hours a day, 365 days a year, so payments can be completed immediately. Remittances and settlements in virtual currencies are attracting attention as a new way of money that solves the problems of traditional legal tender.
Types of virtual currencies
I think that many people tend to think of Bitcoin as a virtual currency. However, the virtual currency other than the bit coin has been said that there is a kind of more than 2,000, but collectively the virtual currency other than the bit coin Alto coin is called.
The reason why there are so many types of virtual currencies is that anyone can create virtual currencies. In some cases, companies are experimenting with creating original currencies. It’s like a local government issuing its own local currency.
You can trade virtual currencies 24 hours a day, 365 days a year
Many cryptocurrency transactions and remittances can be done 24 hours a day, 365 days a year. If you use a third-party institution such as a bank, you can only trade during business hours. With the operation of the more time system from October 9, 2018, it has become possible for financial institutions to provide immediate transfer services 24 hours a day, 365 days a year, but this is not applicable to all financial institutions.
How to get started with cryptocurrencies?
Cryptocurrencies can be purchased through exchanges. The following is a simple flow to purchase.
1. Open an account with a virtual currency exchange company.
2. Deposit US dollar/Canadian dollar.
3. Purchase virtual currency.
Cryptocurrency exchanges may seem difficult, but they are all completed on the web, and you can start with a small purchase amount such as $100.
Benefits of virtual currency:
- Various fees for virtual currencies are cheaper than legal tender.
- You can send money quickly without going through a bank:
- Another advantage of virtual currency is that you can send money quickly.
- You can invest from a small amount:
- You can invest a small amount of virtual currency from a few hundred dollars.
- You can trade 24 hours a day:
- You can trade virtual currencies 24 hours a day, 365 days a year.
There is a future as a market
Cryptocurrencies are expected to have future potential.
The future of virtual currency
Cryptocurrencies are attracting attention only in terms of speculation, but I think you could get to know the mechanism and the world view that you are trying to realize. The legislation surrounding virtual currencies is still under development, and the technology that supports virtual currencies is advancing day by day. The more you know, the more you will realize the convenience of cryptocurrencies.