With the popularization of blockchain technology, digital currency, virtual currency and crypto currency have gradually entered people’s field of vision. However, there are certain differences among the three, and the scope of definition is also different.
Virtual Currency
The “Virtual Currency System Report” issued by the European Central Bank in October 2012 defined virtual currency as: an unregulated digital currency issued and controlled by its developers, accepted and used by members of a specific virtual community.
Simply put, virtual currency is issued by a specific subject and accepted and used by specific members. Currency value, usefulness, management and control are all controlled by the issuer.
By definition, the scope of virtual currency is the largest. Bitcoin can also be regarded as a decentralized virtual currency. Since it is not controlled by any centralized institution, it can purchase certain goods and services, exchange it with fiat currency in both directions, etc. Bitcoin is more precisely defined as an digital currency.
Digital Currency
The definition of digital currency is the most divergent. But the unifying part is this: a currency in digital form, not a physical currency like paper money or coins. It functions like a physical currency, but enables instant transactions and transfer of ownership without geographic restrictions.
Digital currency is the currency paid by electronic means, which is essentially the electronic and networked legal tender. Usually, it refers to the process in which the parties to an electronic transaction, including consumers, enterprises, and financial institutions, use digital payment methods to make monetary payments or transfer funds to another party through the Internet.
Cryptocurrency
Cryptocurrency is a digital currency created based on a certain encryption algorithm.
Cryptocurrency is not issued by any centralized organization, and theoretically it will not be affected by government intervention and control.
Cryptocurrencies use encryption algorithms and encryption techniques to ensure the security of the entire network. Many cryptocurrencies are blockchain-based distributed systems. Transmission is facilitated through private keys and public keys to achieve peer-to-peer transactions. The public key must be published on the blockchain, allowing everyone to witness the ownership and transaction process of the cryptocurrency.
The issuer does not have any restrictions on the value, use and existence of the currency. It runs on the blockchain network, and the value depends on the user. Typical cryptocurrencies such as Bitcoin, Ethereum, EOS, etc.
