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Essay example - Reflecting upon our exploration of monetary and financial history in Topic Two, what are some of the issues surrounding the crea
Finance & Accounting
Pages 7 (1757 words)
VIRTUAL CURRENCY SCHEMES By Instructor Institution State Date Virtual Currency Schemes In recent years, virtual communities have grown rapidly due to the technological development in the real world. These communities for that matter have circulated and created their own currency for exchanging of their services and goods (European Central Bank, 2012)…
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These currencies resemble real money and do come with their discrete, but open retail payment system; leading to the term virtual currency scheme. There are different types of virtual currency schemes; Type 1 (closed virtual currency scheme), it is used in online games; Type 2 (unidirectional flow), this is usually an inflow, this means that they have a conversion rate for buying the virtual currency that aid not only in purchasing the virtual goods and services, but also the real goods and services; Type 3 (bidirectional flow), this gives the currency the ability to behave like any other convertible currency, that is, possess the buying and selling exchange rate, and therefore, it can be used to buy both the virtual and real goods and services. Issues Surrounding Virtual Currency Schemes (Bitcoin and Linden Dollar) The Bitcoin is a virtual currency scheme that is based on the technology of BitTorrent of sharing files over the Internet (European Central Bank, 2012). This technology is based on peer-to-peer network. Its operation is global and has the ability to conduct both real and virtual transaction of goods and services. The exchange rate of Bitcoins which is not nailed to any real-world currency is determined by demand and supply in the market (King, 2012). ...
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