In the early 1980’s, David Chaum wrote a research paper about digital cash and then founded an electronic cash company. Paypal came on the scene in the late 1990’s and a new era of virtual currencies emerged. Most people have heard about bitcoin, but what is it and does it make sense to use?
Digital or virtual currency is a money balance recorded electronically on a stored-value card or other device. Another form is network money, allowing transfer of value on computer networks like the internet. Bitcoin is the most recent e-currency in popularity. It is a mobile application or computer program that provides a personal wallet and allows users to send and receive bitcoins.
Virtual currencies are only that in name and are not actual currencies or legal tender. There has been much debate as to whether these programs should even be called currencies as they are not recognized as such anywhere in the world. They are not controlled by any bank and the value can fluctuate. Projects like bitcoin attract followers more for the philosophy rather than the finance.
Many governments have expressed concern regarding the use of digital currencies for these reasons. Some countries have outlawed bitcoin while others like Norway will not recognize the currency but considers it an asset that should be taxed. United States’ authorities have yet to declare where they stand. Hearings have only proven that some members of Congress see bitcoin as a benefit while others do not.
Despite all the debates these currencies are only growing in popularity. Bitcoin has reached record highs in recent months and businesses all over the globe have made headlines announcing they would receive it as payment. Richard Branson, the billionaire entrepreneur, is very in favor and announced that his Space-X program would accept bitcoin.
In the beginning of 2017, a new player emerged. Ether is the digital money that is from an upstart network known as the Ethereum. Its value has risen 4,500% since January and is worth almost as much as bitcoin. Ether is only two years old and is backed by techies and big corporate names like JPMorgan Chase and Microsoft. These investors are not just excited about the rise in virtual currency users, but also a new type of global computing network which Ether users are generally required to use.