- product description
- main function
- basic parameters
Digital currency can be considered as a virtual currency based on node network and digital encryption algorithm. The core features of digital currency mainly reflect three aspects: ①Due to certain open algorithms, digital currency has no issuer, so no one or organization can control its issuance; ②Due to the fixed number of algorithm solutions, digital currency The total amount of currency is fixed, which fundamentally eliminates the possibility of inflation caused by virtual currency spam; ③ Since the transaction process requires the approval of each node in the network, the transaction process of digital currency is safe enough
The emergence of Bitcoin poses a huge challenge to the existing monetary system. Although it belongs to virtual currency in a broad sense, it is essentially different from the virtual currency issued by network companies, so it is called digital currency. Compare digital currency with electronic currency and virtual currency in terms of issuer, scope of application, quantity of issuance, storage form, circulation method, credit guarantee, transaction cost, transaction security, etc.
|
main elements
|
Electronic money | Virtual currency | digital currency |
|---|---|---|---|
|
Issuer
|
Financial Institutions | Network operators | none |
|
scope of use
|
Generally unlimited | Inside the network enterprise | unlimited |
|
issue number
|
Fiat currency decision | Issuer decides | a certain amount |
|
storage form
|
magnetic card or account | account | number |
|
Circulation
|
two-way circulation | one-way circulation | two-way circulation |
|
monetary value
|
Equivalent to fiat currency |
Not equivalent to fiat currency
|
Not equivalent to fiat currency |
|
credit protection
|
government | enterprise | netizen |
|
transaction security
|
higher |
lower
|
higher |
|
transaction cost
|
higher | lower | lower |
|
operating
environment |
Intranet, Extranet, Read-Write Devices |
Enterprise Servers and the Internet
|
Open source software and P2P networks |
|
typical representative
|
bank card, bus card | Q coins, forum coins | bitcoin, litecoin |
type
According to the relationship between digital currency and the real economy and real currency, it can be divided into three categories:
One is completely closed, has nothing to do with the real economy and can only be used in specific virtual communities, such as World of Warcraft Gold;
The second is that it can be purchased with real money but cannot be exchanged back to real money, and can be used to buy virtual goods and services, such as Facebook credit;
The third is that it can be exchanged and redeemed with real money according to a certain ratio. It can purchase virtual goods and services, as well as real goods and services, such as Bitcoin
transaction mode
At this stage, digital currency is more like an investment product, because it lacks a strong guarantee institution to maintain its price stability, its role as a measure of value has not yet emerged, and it cannot be used as a means of payment. As an investment product, the development of digital currency is inseparable from trading platforms, operating companies and investors. Trading platforms play the role of trading agents, and some of them act as market makers. The profits of these trading platforms come from the procedures for investors to trade or withdraw cash. Fees and premium income from holding digital currency. Platforms with large trading volume include Bitstamp, Gathub, Ripple Singapore, SnapSwap, Japan’s Mt.Gox, the largest bitcoin trading platform in the past, and Chinese rookie Ruihu.
The process of digital currency trading through the platform is as follows:
(1) Investors must first register an account and obtain a digital currency account and a US dollar or other foreign exchange account at the same time.
(2) Users can use the money in the cash account to buy and sell digital currencies, just like buying and selling stocks and futures.
(3) The trading platform will sort the buy request and sell request according to the rules and start matching. If the requirements are met, the transaction will be completed.
(4) A buy or sell request may be partially executed due to the difference between the buy and sell volumes submitted by the user.
The mode of digital currency transactions through operating companies is as follows: Take Ripple as an example. Ripple is operated by a professional operating company OpenCoin. The Ripple protocol was originally designed based on payment methods, and the design idea is based on acquaintance relationship networks and trust chains. To use the Ripple network for remittance or lending, the premise is that the payee and the payer must be friends in the network (establish a trust relationship with each other), or have mutual friends (form a trust chain through the transmission of friends), otherwise they cannot A chain of trust is established between users and other users, and transfers cannot be performed
features
low transaction costs
Compared with traditional bank transfers, remittances, etc., digital currency transactions do not require payment to third parties, and their transaction costs are lower, especially compared to cross-border payments that provide high fees to payment service providers
fast transaction
The blockchain technology adopted by the digital currency has the characteristics of decentralization, and does not require any centralized organization like a clearing center to process data, and the transaction processing speed is faster
high degree of anonymity
In addition to the fact that physical currency can realize peer-to-peer transactions without intermediary participation, one of the advantages of digital currency over other electronic payment methods is that it supports remote peer-to-peer payments. It does not require any trusted third party as an intermediary. Transactions can be completed in completely unfamiliar situations without mutual trust, so it has higher anonymity and can protect the privacy of traders, but it also creates convenience for cybercrime and is easy to be used by money laundering and other criminal activities
The Bank for International Settlements (BIS) defines digital currencies as assets represented in digital form.
Digital currency is referred to as DC which is the abbreviation of "Digital Currency" in English and it is an alternative currency in the form of electronic currency. Both digital gold coins and cryptocurrency are digital currencies. A digital currency is an unregulated digitized currency usually issued and managed by a developer accepted and used by members of a specific virtual community. The European Banking Authority defines a virtual currency as: a digital representation of value that is not issued by a central bank or authority and is not linked to legal tender but is accepted by the public as a means of payment and can be transferred stored or traded electronically
