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Virtual currency

Virtual currency

Virtual currency, also known as virtual money, is a type of unregulated, digital money, which is issued and usually managed by its developers, and used and accepted among the members of a specific virtual community. The Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury, defined virtual currency in its guidance published in 2013. In 2014, the European Banking Authority defined virtual currency as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily affixed to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”.

Contents

In 2012, the European Central Bank defined virtual currency as “a type of unregulated, digital money, which is issued and usually managed by its developers, and used and accepted among the members of a specific virtual community”. [1] :13

In 2013, Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury, in contrast to its regulations defining currency as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance”, also called “real currency” by FinCEN, defined virtual currency as “a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency”. In particular, virtual currency does not have legal tender status in any jurisdiction. [Two]

In 2014, the European Banking Authority defined virtual currency as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily fastened to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”. [Three]

In his written testimony to the two thousand thirteen congressional hearing on virtual currencies Ben Bernanke stated “virtual currencies have been viewed as a form of ‘electronic money’ or area of payment system technology that has been evolving over the past twenty years”, in reference to a congressional hearing on the Future of Money before the Committee on Banking and Financial Services on eleven October 1995. [Four] The Internet currency Flooz was created in 1999. [Five] The term “virtual currency” emerges to have been coined around 2009, paralleling the development of digital currencies and social gaming. [6]

Albeit the correct classification is “digital currency”, US government institutions have preferred and uniformly adopted the term “virtual currency”, very first the US Treasury’s FinCEN, then the FBI in two thousand twelve [7] and in the General Accounting Office in its two thousand thirteen report [8] and other government agencies testifying at the November two thousand thirteen U.S. Senate hearing about bitcoin like the Department of Homeland Security, the U.S. Securities and Exchange Commission, the Office of the Attorney General. [9]

Attributes of a real currency, as defined in two thousand eleven in the Code of Federal Regulations, such as real paper money and real coins are simply that they act as legal tender and circulate “customarily”. [Ten]

The IRS determined in March 2014, to treat bitcoin and other virtual currencies as property for tax purposes, not currency. [11] [12] Some have suggested that this makes bitcoins not fungible—that is one bitcoin is not identical to another bitcoin, unlike one gallon of crude oil being identical to another gallon of crude oil—making bitcoin unworkable as a currency. [13] Others have stated that a measure like accounting on average cost basis would restore fungibility to the currency. [13]

Closed virtual currencies Edit

Virtual currencies have been called “closed” or “fictional currency” when they have no official connection to the real economy, for example currencies in massively multiplayer online role-playing games such as World of Warcraft. While there may be a grey market for exchanging such currencies or other virtual assets for real world assets, this is usually barred by the games’ terms of service.

Virtual currencies with currency flow into one direction Edit

This type of currency has been known for a long time in the form of customer incentive programs or loyalty programs. The very first known coupon in history is very likely from the US, attributed to Asa Candler, inventor of Coca-Cola and the free drink coupons in 1887, followed by C. W. Post’s one-cent-off coupon in breakfast cereal boxes in 1895, both to drive sales. The business issuing the coupon functions as a central authority. [14] Coupons remained unchanged for one hundred years until fresh technology enabling credit cards became more common in the 1980s, and credit card prizes were invented. The latest incarnation drives the increase of internet commerce, online services, development of online communities and games. Here virtual or game currency can be bought, but not exchanged back into real money. The virtual currency is akin to a coupon. Examples are frequent flyer programs by various airlines, Microsoft Points, Nintendo Points, Facebook Credits, Ven (currency) [ disputed – discuss ] and Amazon Coin.

Convertible virtual currencies Edit

A virtual currency that can be bought with and sold back for legal tender is called a convertible currency. It can be decentralized, as for example bitcoin.

FinCEN defined centralized virtual currencies in two thousand thirteen as virtual currencies that have a “centralized repository”, similar to a central bank, and a “central administrator”.

A decentralized currency was defined by the US Department of Treasury as a “currency (1) that has no central repository and no single administrator, and (Two) that persons may obtain by their own computing or manufacturing effort”. [Two] Rather than relying on confidence in a central authority, it depends instead on a distributed system of trust. [15]

Ethereum Edit

Bitcoin Edit

Bitcoin is the very first decentralized digital currency. [16] :1 Trust in the currency is based on the “transaction ledger which is cryptographically verified, and jointly maintained by the currency’s users”. The Bitcoin Foundation claims that bitcoin was “designed to be fully decentralized with miners operating in all countries, and no individual having control over the network”, [17] and that bitcoin is “as virtual as the credit cards and online banking networks people use everyday”. [Eighteen]

According to a Forbes journalist, “bitcoin mining has become increasingly centralized”, [Nineteen] and a group of European cryptologic researchers have questioned, if bitcoin is indeed a decentralized currency. [20] To improve bitcoin’s decentralization, they suggest to encourage fully decentralized mining pools, permit only one vote per bitcoin client, and to increase transparency in decision making. [20]

Digital currency is a particular form of currency that is electronically transferred and stored, i.e., distinct from physical currency, such as coins or banknotes. According to the European Central Bank, virtual currencies are “generally digital”, albeit their bearing precursor, the coupon for example, is physical. [1]

A cryptocurrency is a digital currency using cryptography to secure transactions and to control the creation of fresh currency units. [21] Since not all virtual currencies use cryptography, not all virtual currencies are cryptocurrencies. Cryptocurrencies are generally not legal tender. Ecuador is the very first country attempting a government run digital currency -no cryptocurrency; during the introductory phase from Christmas Eve two thousand fourteen until mid February two thousand fifteen people can open accounts and switch passwords. At the end of February two thousand fifteen transactions of electronic money will be possible. [22] [23]

adapted from an ECB work, Virtual Currency Schemes [1] :11

Virtual currency

Virtual currency

Virtual currency, also known as virtual money, is a type of unregulated, digital money, which is issued and usually managed by its developers, and used and accepted among the members of a specific virtual community. The Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury, defined virtual currency in its guidance published in 2013. In 2014, the European Banking Authority defined virtual currency as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily linked to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”.

Contents

In 2012, the European Central Bank defined virtual currency as “a type of unregulated, digital money, which is issued and usually managed by its developers, and used and accepted among the members of a specific virtual community”. [1] :13

In 2013, Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury, in contrast to its regulations defining currency as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance”, also called “real currency” by FinCEN, defined virtual currency as “a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency”. In particular, virtual currency does not have legal tender status in any jurisdiction. [Two]

In 2014, the European Banking Authority defined virtual currency as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily linked to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”. [Three]

In his written testimony to the two thousand thirteen congressional hearing on virtual currencies Ben Bernanke stated “virtual currencies have been viewed as a form of ‘electronic money’ or area of payment system technology that has been evolving over the past twenty years”, in reference to a congressional hearing on the Future of Money before the Committee on Banking and Financial Services on eleven October 1995. [Four] The Internet currency Flooz was created in 1999. [Five] The term “virtual currency” emerges to have been coined around 2009, paralleling the development of digital currencies and social gaming. [6]

Albeit the correct classification is “digital currency”, US government institutions have preferred and uniformly adopted the term “virtual currency”, very first the US Treasury’s FinCEN, then the FBI in two thousand twelve [7] and in the General Accounting Office in its two thousand thirteen report [8] and other government agencies testifying at the November two thousand thirteen U.S. Senate hearing about bitcoin like the Department of Homeland Security, the U.S. Securities and Exchange Commission, the Office of the Attorney General. [9]

Attributes of a real currency, as defined in two thousand eleven in the Code of Federal Regulations, such as real paper money and real coins are simply that they act as legal tender and circulate “customarily”. [Ten]

The IRS determined in March 2014, to treat bitcoin and other virtual currencies as property for tax purposes, not currency. [11] [12] Some have suggested that this makes bitcoins not fungible—that is one bitcoin is not identical to another bitcoin, unlike one gallon of crude oil being identical to another gallon of crude oil—making bitcoin unworkable as a currency. [13] Others have stated that a measure like accounting on average cost basis would restore fungibility to the currency. [13]

Closed virtual currencies Edit

Virtual currencies have been called “closed” or “fictional currency” when they have no official connection to the real economy, for example currencies in massively multiplayer online role-playing games such as World of Warcraft. While there may be a grey market for exchanging such currencies or other virtual assets for real world assets, this is usually prohibited by the games’ terms of service.

Virtual currencies with currency flow into one direction Edit

This type of currency has been known for a long time in the form of customer incentive programs or loyalty programs. The very first known coupon in history is most likely from the US, attributed to Asa Candler, inventor of Coca-Cola and the free drink coupons in 1887, followed by C. W. Post’s one-cent-off coupon in breakfast cereal boxes in 1895, both to drive sales. The business issuing the coupon functions as a central authority. [14] Coupons remained unchanged for one hundred years until fresh technology enabling credit cards became more common in the 1980s, and credit card prizes were invented. The latest incarnation drives the increase of internet commerce, online services, development of online communities and games. Here virtual or game currency can be bought, but not exchanged back into real money. The virtual currency is akin to a coupon. Examples are frequent flyer programs by various airlines, Microsoft Points, Nintendo Points, Facebook Credits, Ven (currency) [ disputed – discuss ] and Amazon Coin.

Convertible virtual currencies Edit

A virtual currency that can be bought with and sold back for legal tender is called a convertible currency. It can be decentralized, as for example bitcoin.

FinCEN defined centralized virtual currencies in two thousand thirteen as virtual currencies that have a “centralized repository”, similar to a central bank, and a “central administrator”.

A decentralized currency was defined by the US Department of Treasury as a “currency (1) that has no central repository and no single administrator, and (Two) that persons may obtain by their own computing or manufacturing effort”. [Two] Rather than relying on confidence in a central authority, it depends instead on a distributed system of trust. [15]

Ethereum Edit

Bitcoin Edit

Bitcoin is the very first decentralized digital currency. [16] :1 Trust in the currency is based on the “transaction ledger which is cryptographically verified, and jointly maintained by the currency’s users”. The Bitcoin Foundation claims that bitcoin was “designed to be fully decentralized with miners operating in all countries, and no individual having control over the network”, [17] and that bitcoin is “as virtual as the credit cards and online banking networks people use everyday”. [Eighteen]

According to a Forbes journalist, “bitcoin mining has become increasingly centralized”, [Nineteen] and a group of European cryptologic researchers have questioned, if bitcoin is indeed a decentralized currency. [20] To improve bitcoin’s decentralization, they suggest to encourage fully decentralized mining pools, permit only one vote per bitcoin client, and to increase transparency in decision making. [20]

Digital currency is a particular form of currency that is electronically transferred and stored, i.e., distinct from physical currency, such as coins or banknotes. According to the European Central Bank, virtual currencies are “generally digital”, albeit their suffering precursor, the coupon for example, is physical. [1]

A cryptocurrency is a digital currency using cryptography to secure transactions and to control the creation of fresh currency units. [21] Since not all virtual currencies use cryptography, not all virtual currencies are cryptocurrencies. Cryptocurrencies are generally not legal tender. Ecuador is the very first country attempting a government run digital currency -no cryptocurrency; during the introductory phase from Christmas Eve two thousand fourteen until mid February two thousand fifteen people can open accounts and switch passwords. At the end of February two thousand fifteen transactions of electronic money will be possible. [22] [23]

adapted from an ECB work, Virtual Currency Schemes [1] :11

Virtual Currency

Mashable

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39 Latest Stories

On the spectrum of currency ideologues, gold bugs and Bitcoin enthusiasts occupy equal but opposite positions. They’re both suspicious that governments are going to meddle around with normal money so much that it becomes futile — it’s just that one.

Are you fighting with how to deal with bitcoin on your tax come back? Well, fight no more. The Internal Revenue Service on Tuesday announced that bitcoin and other virtual currencies are treated as property, not currency, for federal tax purposes. .

Bitcoin doesn't meet the definition of a currency or even an electronic payment form in Finland, where the central bank has instead determined to categorize the software as a commodity. "Considering the definition of an official currency as set out in l.

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Last week, a bug in the game Diablo III, which permits players to buy items with either real or in-game virtual money, wrecked its entire economy. This affected not only those using pretend gold, but players spending real cash as well. Albeit digital.

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Bitcoin, the world’s most popular virtual currency, dropped from a high of $265 to a low of $156 in a period of six hours Wednesday afternoon. Pretty much everyone the Daily Dot has spoken to recently involved in Bitcoin — buyers, entrepreneurs, vent.

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Prisoners at a labor camp in northeast China were compelled by guards to play online games in a moneymaking scheme, a former prisoner has told The Guardian. The scheme, a practice referred to among gamers as "gold farming," required some three hundred prisoners a.

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Virtual currency

Virtual currency

Virtual currency, also known as virtual money, is a type of unregulated, digital money, which is issued and usually managed by its developers, and used and accepted among the members of a specific virtual community. The Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury, defined virtual currency in its guidance published in 2013. In 2014, the European Banking Authority defined virtual currency as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily linked to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”.

Contents

In 2012, the European Central Bank defined virtual currency as “a type of unregulated, digital money, which is issued and usually managed by its developers, and used and accepted among the members of a specific virtual community”. [1] :13

In 2013, Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury, in contrast to its regulations defining currency as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance”, also called “real currency” by FinCEN, defined virtual currency as “a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency”. In particular, virtual currency does not have legal tender status in any jurisdiction. [Two]

In 2014, the European Banking Authority defined virtual currency as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily fastened to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”. [Trio]

In his written testimony to the two thousand thirteen congressional hearing on virtual currencies Ben Bernanke stated “virtual currencies have been viewed as a form of ‘electronic money’ or area of payment system technology that has been evolving over the past twenty years”, in reference to a congressional hearing on the Future of Money before the Committee on Banking and Financial Services on eleven October 1995. [Four] The Internet currency Flooz was created in 1999. [Five] The term “virtual currency” shows up to have been coined around 2009, paralleling the development of digital currencies and social gaming. [6]

Albeit the correct classification is “digital currency”, US government institutions have preferred and uniformly adopted the term “virtual currency”, very first the US Treasury’s FinCEN, then the FBI in two thousand twelve [7] and in the General Accounting Office in its two thousand thirteen report [8] and other government agencies testifying at the November two thousand thirteen U.S. Senate hearing about bitcoin like the Department of Homeland Security, the U.S. Securities and Exchange Commission, the Office of the Attorney General. [9]

Attributes of a real currency, as defined in two thousand eleven in the Code of Federal Regulations, such as real paper money and real coins are simply that they act as legal tender and circulate “customarily”. [Ten]

The IRS determined in March 2014, to treat bitcoin and other virtual currencies as property for tax purposes, not currency. [11] [12] Some have suggested that this makes bitcoins not fungible—that is one bitcoin is not identical to another bitcoin, unlike one gallon of crude oil being identical to another gallon of crude oil—making bitcoin unworkable as a currency. [13] Others have stated that a measure like accounting on average cost basis would restore fungibility to the currency. [13]

Closed virtual currencies Edit

Virtual currencies have been called “closed” or “fictional currency” when they have no official connection to the real economy, for example currencies in massively multiplayer online role-playing games such as World of Warcraft. While there may be a grey market for exchanging such currencies or other virtual assets for real world assets, this is usually barred by the games’ terms of service.

Virtual currencies with currency flow into one direction Edit

This type of currency has been known for a long time in the form of customer incentive programs or loyalty programs. The very first known coupon in history is most likely from the US, attributed to Asa Candler, inventor of Coca-Cola and the free drink coupons in 1887, followed by C. W. Post’s one-cent-off coupon in breakfast cereal boxes in 1895, both to drive sales. The business issuing the coupon functions as a central authority. [14] Coupons remained unchanged for one hundred years until fresh technology enabling credit cards became more common in the 1980s, and credit card prizes were invented. The latest incarnation drives the increase of internet commerce, online services, development of online communities and games. Here virtual or game currency can be bought, but not exchanged back into real money. The virtual currency is akin to a coupon. Examples are frequent flyer programs by various airlines, Microsoft Points, Nintendo Points, Facebook Credits, Ven (currency) [ disputed – discuss ] and Amazon Coin.

Convertible virtual currencies Edit

A virtual currency that can be bought with and sold back for legal tender is called a convertible currency. It can be decentralized, as for example bitcoin.

FinCEN defined centralized virtual currencies in two thousand thirteen as virtual currencies that have a “centralized repository”, similar to a central bank, and a “central administrator”.

A decentralized currency was defined by the US Department of Treasury as a “currency (1) that has no central repository and no single administrator, and (Two) that persons may obtain by their own computing or manufacturing effort”. [Two] Rather than relying on confidence in a central authority, it depends instead on a distributed system of trust. [15]

Ethereum Edit

Bitcoin Edit

Bitcoin is the very first decentralized digital currency. [16] :1 Trust in the currency is based on the “transaction ledger which is cryptographically verified, and jointly maintained by the currency’s users”. The Bitcoin Foundation claims that bitcoin was “designed to be fully decentralized with miners operating in all countries, and no individual having control over the network”, [17] and that bitcoin is “as virtual as the credit cards and online banking networks people use everyday”. [Legitimate]

According to a Forbes journalist, “bitcoin mining has become increasingly centralized”, [Nineteen] and a group of European cryptologic researchers have questioned, if bitcoin is indeed a decentralized currency. [20] To improve bitcoin’s decentralization, they suggest to encourage fully decentralized mining pools, permit only one vote per bitcoin client, and to increase transparency in decision making. [20]

Digital currency is a particular form of currency that is electronically transferred and stored, i.e., distinct from physical currency, such as coins or banknotes. According to the European Central Bank, virtual currencies are “generally digital”, albeit their suffering precursor, the coupon for example, is physical. [1]

A cryptocurrency is a digital currency using cryptography to secure transactions and to control the creation of fresh currency units. [21] Since not all virtual currencies use cryptography, not all virtual currencies are cryptocurrencies. Cryptocurrencies are generally not legal tender. Ecuador is the very first country attempting a government run digital currency -no cryptocurrency; during the introductory phase from Christmas Eve two thousand fourteen until mid February two thousand fifteen people can open accounts and switch passwords. At the end of February two thousand fifteen transactions of electronic money will be possible. [22] [23]

adapted from an ECB work, Virtual Currency Schemes [1] :11

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