What are virtual currency and cryptocurrency?
Suddenly, interest in virtual currency and cryptocurrency is increasing. The term virtual currency has been being in Japan commonly used, but cryptography is secured security by, because it is the currency that is traded on the net, in the recent encryption currency.
In the distant past, the currency itself used gold, silver, shellfish, and other rare values, and became gold and silver coins. After that, convertible notes were issued against the backdrop of creditworthiness based on the possession of gold and silver by banks and the state, but nowadays, convertible notes, the convertible currency is not guaranteed, such as exchange of such money, etc. Banknotes (fiat currency) are the mainstream.
Cryptocurrency is supported by cryptography and is positioned as the currency traded on the Internet. Typical examples include Bitcoin, Ether, and Ripple. There is no national guarantee, but by establishing unique restrictions on the issuing form of cryptocurrencies, credit is secured and rarity and security are guaranteed.
For example, in the case of Bitcoin, the amount of currency issued is limited, the currency is reduced regularly, and coins are generated after mining (a search for logic that can issue Bitcoin). By adopting this new form of coin issuance, we are limiting the amount of currency that can be supplied.
Also, credit is secured by transactions between data (blocks) called blockchains. The point is to chain the bitcoin transaction data, put a time stamp on it, and block the once set block so that it cannot be tampered with later.
By using the blockchain, it is impossible to tamper with the data, making it difficult to tamper with the transaction itself or issue a “counterfeit bill,” and it is possible to carry out secure transactions. Best apps are here at bitcoincircuit.com
The fluctuation of credit of currency issued by the nation
Concerning cryptocurrencies, there are some places where it is hard to trust because the credibility of the state is not supported. There are fears such as “whether issuance is limited in the first place and scarcity is guaranteed”, “whether the credit of money is destroyed by technical holes. However, after all, no matter what form coins are in, they are valued only by agreement based on credit. Therefore, there is no difference between the current fiat currency and cryptocurrency in that the value-form is protected based on trust.
Because gold is trusted and valued is scarce, as long as the cryptocurrency regulates the issuance volume, scarcity value recognition and credit may be maintained.
The current fiat currency and fiat currency are less trustworthy. Many countries print large amounts of banknotes in an attempt to create inflation. Although you are aiming for nominal growth, you can print as many banknotes as you have no support for their value, so you are reducing the relative value of rare items.
For example, the relative value of dollars and yens to gold has halved over the last 20 years. The shift of money to cryptocurrency in China is due to the belief in the nation, and the belief in the nation’s own currency “yuan” issued by the nation. The point is that we do not trust our currency, so we are moving funds to other currencies and land.
In other words, due to the unlimited reprinting of banknotes and the deterioration of the credibility of the nation, the credibility of the fiat money and fiat currency issued by the nation is also fluctuating.
The start of selection and selection due to the cryptocurrency speculation bubble
Just because the credibility of the currency issued by the nation is fluctuating, it can only be said that the cryptocurrency is definitely in its infancy. The fiat currency issued by the nation is represented by a physically hand-held paper or metal, so there is a sense of security that there is a physical thing that you can get.
In that respect, cryptocurrency is only data on the internet, so it will take time to dispel the anxiety as a virtual entity.
Also, as cryptocurrencies are appearing one after another, there are concerns about issuers and concerns about cryptography.
Image Source: BigStock.com (Licensed)