Understanding More about Virtual Currency
A lot of people say that they are experts on virtual currencies. But when they were asked about their opinion on virtual currencies, they go around in circles without exactly hitting the nail on what virtual currency is about. The truth is, their minds are still clouded by their potential earnings in fiat currency. Most people think that virtual currency is like those amounts on their Paypal Account or Online Banking account where the final valuation is dictated by the amount of fiat they receive.
In the book of Philip Mullan, digital currency is a general term for privately issued electronic value which circulates over the Internet outside of conventional banks. It is sometimes loosely referred to as “money that circulates online but not through a bank.” No privately issued digital currency has legal tender status in any country. Digital currency systems include both value transfer and Internet accounting systems. A closed online accounting system can be easily modified to be used as a type of digital currency. Because private Internet payment systems operate outside of conventional banking networks, these new global payment products represent a huge leap forward for inexpensive personal financial services.
Fact #1: Receiving Virtual Currencies already means You’re Paid
Whether the virtual currency is derived from math, cryptography, productivity, or any specific activity done online or even offline, earning those means receiving it’s value in its entirety. It’s valuation is based on the overall consensus or general agreement of the entire community using the virtual currency. Bitcoin for example requires you to download a software which allows your computer to participate in the global problem-solving activity for which the software aims to “guess” that value which will complete or solve the block on the blockchain. To guess faster, bitcoin miners would buy rigs in hundreds or even thousands of dollars a piece just to be able to speed up the guessing game. In short, it depends on who among those participants online, within the Bitcoin network guesses the correct value that completes or solves the next block for blockchain. Once you’re PC solves that problem, you earn bitcoins and you’re paid in Bitcoins.
That is why a Federal Judge says virtual currency (like Bitcoin) is real money in the case versus TRENDON T. SHAVERS AND BITCOIN SAVINGS AND TRUST.
Fact #2: Corporate Exchanges are NOT required by Virtual Currencies
Since there’s more or less 21 Million Bitcoins that will be in circulation all throughout the planet, this then indicates its scarce nature. If it’s hard to come by, then it’s value would tend to go up. But of course, the value entirely depends on the market. The proponents of Bitcoin intended bitcoin to be a final payment in itself. The exchanges are only there since they found an opportunity to control the currency price by offering it like a commodity. The exchanges opened their business in order for those who are accustomed to fiat to have a way to earn fiat and of course focus on saying that the best way to ever acquire a virtual currency is through them. Forget about the mining process. Buy now while it’s low. Then sell when it’s high. And they surely can control the virtual currency’s value.
Exchanges will just be the cause of failure for virtual currencies. Remember, there’s peer to peer. Peer to peer trading is still better than an Exchange because you, as the person who owns the virtual currency, are able to dictate the amount you want for your virtual currency. Following the rates from exchanges will only devalue your virtual currency since they play around supply and demand. And you know for a fact that virtual currencies are scarce in nature which should indicate that its value should be increasing. Dealing with an exchange is like dealing with another form of government. Once they have you, you’re leashed.
In other words, the goal of exchanges is to monopolize the control of virtual currencies away from the original people who created it and take control of the valuation.
Fact #3: The Value of Virtual Currencies are Determined by Real People not Governments
The real virtual currency is backed by the people using it and not by the exchange, not governments and not even other types of financial institution. Once a virtual currency is controlled by these entities, it will most likely to fail. Remember Mt. Gox and its users? Someone out there gained. That’s for sure.
Take note that I am talking about “control” not “use.” Those two words are different. If they use it, then it’s not controlling it and that is the key to increasing the value of virtual currencies: its usability. The moment they “control” it, then that’s the bad side of it since they can tremendously impact its value. And most of the time, on a downward spiral.
Fact #4: Virtual Currency is Property and Private Money
And since only a few owns it, is what makes its value tick. Compumatrix Compuceeds for example is another form of virtual currency. It is a centralized virtual currency like Ripple but Compumatrix doesn’t control the virtual currency but instead focus on “using” it through the Cryptoceeds.com eWallet and is continuously spent on the Compumatrix Trading Portal.
When you receive the virtual currency, you are already paid. But what’s interesting is that the value of your digital asset when you started compared to the value of the same asset (after you go through its rigorous trading, selling, buying, and value added activities) is higher than that of your original capital because it allows you to conduct peer to peer trading via the Compumatrix trading platform.
For example: If you bought a Diamond Card Package of Compuceeds by spending 500 euros worth of Bitcoin via Bitpay, you will soon find yourself owning 166 euros more in just a few days rather than waiting it out on an exchange which gives you a 50:50 chance and most of the time, that chance is more likely on the losing side.
Next time you earn virtual currency online, be part of the proud crowd. When you earn bitcoin, always remember that it’s real value is based on you and not on any exchange. When you receive Compuceeds, the key point is not how much fiat you intend or want to receive but how much the virtual currency is worth to you and the online community you belong to.