The world of virtual currency

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I remember the rave with EgoPay, AlertPay, PayPal, LibertyReserve, Payza and other online payment processors. Some of these have since disappeared from the scene. The latest, Payza, is said to be a way of funneling stolen funds out of the United States.

Fast-forward to 2018 and you know that one of the biggest things people talk about is crypto currency. It’s hard for one to talk about investment and fail to mention Bitcoin, which is the biggest among the over 600 virtual currencies online.

But what is a virtual currency? According to Sia Partners Online, “Virtual Money can be defined as a digital representation of value that is issued and controlled by its developers, and used and accepted among the members of a specific (virtual) community. Unlike regular money, it is relying on a system of trust and not issued by a central bank or other banking authority. “

On the company website, Sia Partners explains why “Virtual Money” could become really important, which are the main products and players in the market today and what are their main characteristics, risks and advantages. They also explained key concepts related to Virtual Money, such as “Mining” and “Blockchain”.

There are many virtual currencies online in 2018 and every virtual currency has its own way of functioning. Most of them are crypto currencies, digital currencies in which encryption techniques are used. Each virtual currency has its algorithms and a varying level of anonymity.

Since Bitcoin appeared in 2009, many virtual currencies have appeared but as you can see, Bitcoin today still accounts for approximately 90% (approximately $4.8bn out of $5.3bn), of total crypto Market Capitalization which consists of more than 650 virtual currencies. Some of the main crypto currencies are Litecoin, Ethereum, Zcash, Dash, Ripple, Monero and many others.

Some are disappearing. XenCoin is one of those that have packed up, having only lived for a couple of months and reached a Market Capitalization of a mere $40k before disappearing. 

What you should watch out for

In the world of virtual currencies, there are advantages of the Blockchain technology and associated risks. The Blockchain technology used in Bitcoins and other virtual currencies (VCs) has an important advantage compared to existing technologies as it contributes to achieving a higher worldwide financial integration.

VCs like Bitcoin are first of all “global” currencies compared to the 200+ local currencies in use worldwide. Bitcoin for example, grants access to the financial system to anyone who has internet access, thus making instant international payments possible for almost everyone on the planet, without making use of the existing Financial System and Banking networks.

This is particularly important given today, and according to the IMF, around 50% of the World’s adult population do not access formal banking services in any form. But now, if they have internet connectivity, they could do so without many hassles.

There are other advantages too.  Notable however, is the fact that this new payment environment has the tools to completely disrupt the hierarchy in the banking system, as the use of the technology implies that no permission is needed from any third party to make payment. It basically gives every actor in the system the same rights… and duties.

Rejected in some quarters

The Federal Government of Nigeria issued a statement last year that Nigerians should desist from the use of Bitcoin, saying such currencies are not money at all. At that same time when Nigerians were defrauded by MMM, it was also highlighted that crypto currency trading or the use of these by Nigerians is not recognized by the authorities as being legitimate.

True, some negative occurrences have loomed with the success of Bitcoin. A hand-full of snake-oil business men trick people into wasting their time with ‘Bitcoin mining’ fields online. They purport that anyone can reap Bitcoin without doing anything other than refer others, or simply by signing up and ‘waiting’ for Bitcoin payments to occur in your account wallet.

Others have gone farther by selling fake software claiming you could turn a millionaire in a year simply by buying software for $37 and reaping Bitcoin over the course of 365 days!

BItcoin’s future

We have seen Bitcoin’s worth rally much higher than the dollar. This is a trustworthy currency which is able to succeed where E-Gold failed. Speculators have sometimes claimed that one day a Bitcoin will be worth $20,000. Maybe, maybe not.

For many of us, we are still trying to decipher the real meaning of Bitcoin. Its recent fall against the dollar cannot predict the future. Currencies rise and fall. That’s the stuff they’re made of. Should you invest in it? That’s a personal choice. Everything about currencies is often judged to be nothing but speculation. If you are like me, you will know that virtual currencies are all about nothing.

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