The difference between electronic money and virtual money

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 Comparison between electronic money and virtual money


There are several electronic payment methods, such as electronic money and virtual money, which are two types that have many fundamental differences, as follows:

The difference between electronic money and virtual money



By definition


Electronic money is electronic money or money exchanged electronically, in the form of electronic stores or technological devices that store monetary value, used in many fields; For example, making payments to third parties - in addition to the issuer - can also be used as a prepayment instrument.


Virtual currency, it is an unregulated digital currency that can only be obtained in electronic form, and virtual currency can be stored and processed through dedicated software, mobile or computer applications, or through dedicated digital wallets and special currencies. The transaction passed the Internet using a secure, self-regulating network, also known as cryptocurrency.



In terms of means of production and ownership


Electronic money can be created in several steps; First, the buyer gets a certain number of small monetary units called (tokens) from the issuing bank, and then the buyer gets a special program for managing electronic money. The program is free, by a company that protects monetary units (CyberCash), from any erasing or copying. As for the seller who deals with these funds, he must cooperate with a bank that issues electronic money, and he must also obtain a special program (CyberCash) from the same company to protect it in the field of selling and protecting electronic money. 




Any individual can also create and own a new virtual currency by creating (a blockchain); It is one of the crypto-currency techniques, and many online tutorials can be used to learn how to create a virtual currency, care must be taken when creating such a currency requires basic crypto skills and at least a deep understanding of (blockchain). 


In terms of the type of control and supervision



If electronic money is issued by the Central Bank, there is no supervision, but if it is issued by an ordinary bank, credit or non-credit institution, in this case, electronic money must be digitally regulated and controlled by the Central Bank; To avoid all dangers and this is the result of these institutions issuing these funds. 


As for the virtual currency, it is not subject to any form of supervision or control by the Central Bank or any official body in the country. 


In terms of the exporter


The source knows, it is the institution responsible for issuing this money, and the first source of electronic money is the central bank located in any country, and credit and non-credit institutions that carry out money business can be its exporters; Like France, there are also banks and financial institutions; Like the United States, but only if it is subject to the control and supervision of the Central Bank. 


As for virtual currency, as mentioned earlier, it is an unregulated digital currency, so it is not issued or controlled by the central bank, and it is usually issued by private issuers or certain individuals, as used by specific virtual communities.


In terms of public opinion and degree of acceptance


One of the advantages of electronic money is that it is widely accepted, whether individuals or institutions, and its users can deal with several parties or other banks, and the acceptance of electronic money may depend on: the source, and trust in global business. [7]


Modern people have different opinions about virtual currency. In the past, the processing of virtual currency was very limited, but now the volume of transactions for the new virtual currency has expanded significantly, especially Bitcoin, which has proven itself on a global scale. Germany is the first to use virtual currency. currency country. Know that Bitcoin is an electronic currency. However, the virtual currency still lacks confidence for some, depending on the consequences for the issuer and the parties that control it. 


Disclosure of customer identities during transactions


In this regard, a distinction must be made between two types of electronic money: nominal electronic money and non-nominal electronic money. Because it contains an electronic monetary unit, it is linked to everyone who trades it. As for the second, the identity of the holder is not revealed during the transaction, unless the same person spends more than once, [10] on the virtual currency; The identity of the customer is not revealed when transactions are made. 





In terms of transparency in trading


Electronic money enjoys a high degree of transparency in transactions, because the texts related to electronic money are very clear, as they clarify the rights and obligations of the parties, [12] As for the virtual currency, one of its distinguishing features is transparency, according to the expert Primavera de Filippi, a researcher at the National Center for Scientific Research in Paris. 




For example, if a person owns a bitcoin wallet, everyone else can know the number of their bitcoins other than the number of transactions made, so that anyone can view them with complete transparency. 


In terms of legal status


For electronic money, there is no legal basis, no legislation to enforce personal processing, and no statutory exemptions apply, meaning that creditors can refuse to use it for payment and demand payment of debts in cash in the traditional way. models, so electronic money is only one of the electronic payment methods and does not belong to a new type of currency. 


To the extent that the virtual currency is not subject to any control body, most countries of the world do not officially allow it, but some warn against dealing with it because of its lack of government control over it, and the fact that its owners are unknown, and fraudulent practices abound, which makes the process of legal claims difficult. 15th


Examples of electronic money





A common example of electronic money is: 

  1. Electronic wallet: An electronic wallet is a smart card used to store the value of a certain currency, using a magnetic strip or a computer chip (embedded circuit), through which electronic money can be transferred to another card without being linked to a central computer. or any other party.
  2. Digital currency: (English: Digi cash) The monetary value is stored on a computer disk for use by the consumer's PC, but its network must be connected to an international network.
  3. Examples of virtual money


Common examples of virtual currencies include:


  1. Bitcoin: Bitcoin was the first virtual digital currency; It was considered a cryptocurrency because encryption made it easier to create Bitcoin transactions, with over 18.5 million Bitcoins currently in circulation and the maximum value is 21 million. 
  2. Bitcoin Cash: (English: Bitcoin Cash) was launched in 2017 and is one of the most popular types of cryptocurrencies in the market. The main difference between the original Bitcoin Cash is the block size; The latter has a larger capacity, which offers Bitcoin Cash faster processing speeds than the original Bitcoin. 
  3. Litecoin: Litecoin is a way to use Bitcoin, created by Charlie Lee in 2011 AD to improve the way Bitcoin works; In terms of shorter transaction times and lower fees. 
  4. Ripple is a cryptocurrency that is widely used by large companies and organizations. 
  5. Stellar: It was designed by Ripple co-founder Jed McCaleb in 2014 and is run by a non-profit organization called Stellar.org to make it easier to use in developing countries without having access to any traditional banks. 


Electronic money and virtual money are similar in that they are money that is traded electronically only, and there is no known traditional form of money, and the two types differ in many ways; such as production methods, methods of holding, exporters, etc., but in general for example, it is not recommended to deal with them unless all provisions have been reviewed related to fraud prevention or fraud, and while the legislation allows its processing, virtual currencies are not subject to any party formal organization. Electronic money, it lacks many of the characteristics that traditional money possesses, and electronic money is divided into two main types: Electronic wallets where cash value is stored using integrated circuits, and digital currencies store cash value on computer disks.