What is virtual currency and cryptocurrency? difference? Super vernacular translation Konjac for you!

The original text was published on the website of "Bibei Thinking": What are virtual currencies and cryptocurrencies? difference? Super vernacular translation Konjac for you!

What is the difference between virtual currency and cryptocurrency? Many new investors who have just entered the currency circle will confuse the two, but they are not the same. This article will introduce you to what is virtual currency and cryptocurrency? Types, principles, characteristics and the difference between the two! Don't worry about being too complicated, the content will be answered in a super vernacular way for you who are new to investing, let's take a look!

What is virtual currency?

What is virtual currency?

Virtual currency (English: Virtual currency) is a digital currency. From the literal meaning of "virtual", we can know that it is a "non-physical" digital currency; which means that it only exists on the Internet and can be used as a medium of exchange in the online world.

Kind of virtual currency

For ease of understanding, I divide virtual currencies into two categories:

1. "Centralized" virtual currency: virtual currency regulated and issued by a third party (government or large institution), such as: LINE POINT, OPEN POINT, shrimp coins, game coins, and even numbers in accounts in online banks , are considered virtual currencies.
2. "Decentralized" cryptocurrency: A cryptocurrency that is not controlled by any third party, it is a kind of virtual currency; but it is encrypted and protected by "cryptography", such as: Bitcoin, Ethereum, Dogecoin and other cryptocurrencies .

What is cryptocurrency?

What is cryptocurrency?

Cryptocurrency (English: Cryptocurrency, also known as Cryptocurrency, Cryptocurrency) is a virtual currency encrypted by "cryptography", and its underlying technology is " blockchain ".

You can understand it as:

Virtual currency + cryptography = cryptocurrency

The world's first cryptocurrency was proposed by " Satoshi Nakamoto" in 2009: Bitcoin (English: Bitcoin, abbreviation: BTC or XBT). The reason why Satoshi Nakamoto created Bitcoin is to hope that cryptocurrency can be free from the control of any third party such as government and become a real "world currency" that can flow freely around the world.

No one knows who Satoshi Nakamoto is yet, but many speculate that it may be a group rather than a single person.

Cryptocurrency Features

1. Decentralization: Cryptocurrencies are not regulated or controlled by any third party (government, bank, institution, etc.).
2. High security: cryptocurrencies can be stored in virtual wallets on the Internet and protected with a "private key" made of cryptography.
3. Anonymous Transactions: Cryptocurrency transactions are anonymous and do not reveal the identity of the trader except for the cryptocurrency address.
4. High transparency: Every cryptocurrency transaction will be put on the blockchain, so everyone can view it.
5. Transactions are irreversible: Cryptocurrency transactions are irreversible, which means that if you send to the wrong address or blockchain, the money is gone and cannot be recovered.

Cryptocurrency Principles

Since cryptocurrencies are decentralized and do not have the assistance of a third party, they need to be calculated and maintained through the process of "mining". Here I will divide the explanation into 3 parts: propose the transaction, perform the calculation, and complete the transaction.

1. Proposed transaction: When A wants to transfer cryptocurrency to B, a transaction is proposed.
2. Perform calculations: Miners (referring to people who mine, usually computer equipment) find new blocks at this time, and start transactions for calculation and verification.
3. Transaction Completion: After the transaction verification is completed, the miner will add the transaction record to the blockchain and update the transaction record; at the same time, the miner will also receive cryptocurrency as a reward for mining.

It can be seen that the principle of cryptocurrency is a reciprocal process: the person who proposes the transaction can complete the transaction without a third party; the miner is rewarded by verifying the transaction.

Kind of cryptocurrency

How many cryptocurrencies are there?

As of July 2022, there are 20,268 cryptocurrencies (source: CoinMarketCap ). Although the numbers are hard to imagine, in fact, cryptocurrencies are mainly divided into two categories: mainstream coins and altcoins.

• Mainstream coins: Some people think that all other than Bitcoin are altcoins; some people think that the top 20 cryptocurrencies are all mainstream coins.
• Altcoins: Non-mainstream coins can be said to be altcoins, and the risks are usually higher.

Top Cryptocurrencies Collation

The following table summarizes the top 10 popular cryptocurrencies

As of 8/24/2022 (Source: CoinMarketCap )

The difference between virtual currency and cryptocurrency

What is the difference between virtual currency and cryptocurrency?

Is virtual currency the same as cryptocurrency?

Virtual currency is not the same as cryptocurrency; but cryptocurrency is a type of virtual currency.

You can think of the relationship between "virtual currency" and "cryptocurrency" as: virtual currency is like a country, and cryptocurrency is just a city in it.

Further reading:

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• "The Road to Wealth and Freedom" Reading Notes | Teach you to become more valuable, no longer need to sell your time for money!