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What is virtual currency?

Virtual currency is a form of online money that exists solely in the virtual world. Central banking authorities, such as the United States Federal Reserve, do not regulate this currency. Users typically store virtual currency in online wallets or accounts. Many virtual currency systems rely on mining, a practice that allows individuals to use specific software to solve math problems to earn money. Users with powerful PC hardware and the right mining tools have an advantage and can mine the currency more rapidly. Consumers can exchange, buy, and trade virtual currencies for goods and services through merchants who accept the particular forms of currency.

What are the most popular types of virtual currency?

Bitcoin is the most widely used form of virtual currency, and it was the first to introduce a decentralized, unregulated, peer-to-peer currency system that involves mining. Litecoin is the second most popular virtual currency, and it relies on an open source payment system. Peercoin, Dogecoin, and Primecoin are also major players in the virtual currency industry. Darkcoin is a form of currency that offers greater anonymity, as it uses a decentralized master code that makes transactions more difficult to trace.

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