Cryptocurrencies, digital coins, virtual currency, virtual money, online money, electronic money...
Is it all the same? With these denominations, we refer to a new concept of money or exchange value system, but:
What is a virtual currency?
The European Central Bank (ECB) defined in 2012 a "virtual currency" as "a type of unregulated, digital money that is emitted and usually controlled by its developers, being used and accepted among the members of a specific Virtual community ".
What is a digital currency?
However, Digital currency is a virtual currency form that is created and stored electronically. Cryptocurrencies are a type of digital currency, but not the only ones.
Therefore, Cryptocurrencies are a subset of digital coins based on cryptography.
Cryptocurrencies: Backed up and protected by mathematics
Cryptocurrencies are backed up by mathematics, which makes it impossible to control by a single group or person. They do not have physical support, as in the case of gold.
This money has the peculiarity that it can only be exchanged electronically. This is done using a computer network, usually connected to the Internet and a value system that is stored digitally.
The prefix crypto, comes from the Greek word kruptos, which means hidden, secret and refers to the cryptographic system (codification-mathematical encryption) developed to create, store and transfer digital coins. Cryptography is the study of information encryption methods, mainly used to send a message securely and privately, and for data security and authentication.
Although Bitcoin is the most well-known cryptocurrency, since its launch in 2009 a large number of "fork" currencies have emerged that are currently approaching one thousand and each one of them has its own peculiarity. Cryptocurrencies are subdivided in turn into: altcoins, metacoins, appchains or appcoins.
Finally, it should be clarified that, although not included in this new concept, "common" currencies such as the Dollar and the Euro are also used as digital currencies. For many years they are stored and travel digitally, and when we make a bank transfer ones and zeros (1 and 0) travel through digital networks transmitting this money.
According to Oxford's dictionary, it is "a digital currency that uses encryption techniques to regulate the generation of currency units and verify the transfer of funds, and operates independently of a central bank."
According to the Cambridge dictionary, it is "A digital coin produced by a public network instead of any government, which uses cryptography to ensure that payments are safely sent and received."
According to Coindesk (Bitcoin specialized digital newspaper), it is "a currency form based solely on mathematics. Instead of the fiduciary currency, which is printed, a cryptocurrency is produced by solving mathematical problems based on cryptography".
According to Wikipedia, it is "a medium of exchange that use cryptography to secure transactions and control the creation of new units."