Does Virtual Currency Have A Real Place In Today’s Economy?

Virtual Currency and Finance Future — Taken from an article on thefinanser.co.uk, this graphic explains the business of virtual money and questions its various aspects. Link to the original article is in the citations below.

When faced with the idea of virtual currency, many aren’t sure how to think of it. After all, virtual currency has yet to become mainstream. Or has it already? The truth is that virtual currency may soon be available as a method of payment at your local retailer, and that you may be able to withdraw money from your virtual currency account using a special ABM machine.

Virtual Currency vs. Paper

We all know that physical money is the most-used currency in the world today. This form of currency, a government proxy, is what makes our economy go round. But would it be worth as much if masses of people abandoned it for another form of currency? Some say likely not. Physical currency, while great for exchanging for goods, tends to be pretty limited in terms of its uses. Not only that, but the value of physical currency differs from country to country. And on top of that, there is the exchange rate, which can change hourly.

Virtual currency, on the other hand is borderless. There are no exchange rates, because this type of currency is worth the same no matter which country you are residing in. The results of this are staggering; one popular type of virtual currency, once at par with the American dollar, is now worth $800 per single denomination.

As well, virtual currency is not regulated by any single bank, making it an incredibly versatile currency for trading between peers.

Just How Popular Is Virtual Currency?

Believe it or not, there are at least 80 different kinds of virtual currency in use around the world today. And some say that the trend will not be receding any time soon. This may be because virtual currency has attracted the attention of investors, who are the ones who ultimately determine how much the currency is worth.

However, opinions are divided about the newer forms of virtual currency. Some say that, although the popularity of these currencies are growing at a rapid pace, that the bubble will soon burst due to a model they say is unsustainable. However, merchants both online and off are beginning to recognize that virtual currency is a viable method to paying for goods and services.

A Vision of the Future

Those championing the virtues of virtual currency envision a world where different currencies are used, depending on what the people decide they want to use. Some types of virtual currency can be used as a direct exchange between parties, while other currency may allow one to trade a particular item in one country for a completely different item in another. Still other types of currency is open source, and available in a finite amount. Some of these are worth different amounts, depending on what the servers running the virtual ‘bank’ agrees is fair.

The Dark Side of Virtual Currency

Of course, virtual currency does have its dark side. It is because this type of currency is unregulated by a central bank that it can be easily transferred, spent and earned without any trace. There are several illegal activities that have been funded by virtual currency, as well as many web sites deal in illegal substances and items which only accept virtual currency.

Some argue that while the idea of virtual currency can offer a freedom that few have seen before, fail safes must somehow be put into place to ensure that no illegal transactions or at least less of them, are able to be completed in this way. But the question of who will be responsible for applying the security measures needed to protect both the owners and the users of virtual currency has yet to be answered.

Citations:

Guest author Renee Morgan writes on a variety of topics related to technology. She recommends Highspeed Internet Provides to consumers wishing to assess their options in broadband.

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