#25unit 2e commerce payment system
Digital cash
Electronic currency that behaves like cash.
3D Learning World
Interactive Visualizations
Topic Diagrams
Digital cash vs virtual currency
Two distinct alternative payment systems often confused.
Digital Cash
- Algorithm-generated authenticated tokens
- Represents real-world cash value
- Example: Bitcoin (cryptocurrency)
- Anonymous — 34-character address
- Mined via peer-to-peer network
- Fluctuating open-market value
Virtual Currency
- Circulates within an internal community
- Used to purchase virtual goods
- Example: Linden Dollars (Second Life)
- Issued by a specific corporate entity
- Not used in the real world
- Typically not mined
Digital cash (e.g. Bitcoin) consists of algorithm-generated tokens representing real-world cash value, is anonymous, and is mined via a peer-to-peer network. Virtual currency (e.g. Linden Dollars) circulates only within an internal virtual world community and is used to purchase virtual goods.
Explanation: Digital cash (e.g. Bitcoin) consists of algorithm-generated tokens representing real-world cash value, is anonymous, and is mined via a peer-to-peer network. Virtual currency (e.g. Linden Dollars) circulates only within an internal virtual world community and is used to purchase virtual goods.