Basic Terms of Virtual Currency

This time, let's look at the basic concepts of various virtual currencies.

What is #virtual currency?
Virtual currency is digital money based on cryptographic technology. Through a decentralized ledger system called blockchain, it records transaction histories safely and transparently around the world.
The greatest feature of virtual currency is that it enables trustworthy transactions and storage of value without the involvement of a central authority.
Representative virtual currencies include Bitcoin and Ethereum.

#The difference between coins and tokens
There are broadly two types of digital assets in the virtual currency market.
One is the coin, and the other is the token.
A coin is a virtual currency that operates on its own independent blockchain network; Bitcoin, Ethereum, and Ripple are representative examples.
They have independent transaction systems and store-of-value functions, so they are used as decentralized currencies.
A token, on the other hand, is a digital asset built on top of an existing blockchain network.
ERC-20 tokens created on the Ethereum network are a representative example.
Tokens do not have their own blockchain and operate on top of other platforms. The stablecoin Tether (USDT) and NFTs are also tokens.

#What is an altcoin?
Virtual currencies other than Bitcoin are generally classified as 'altcoins'.
Ethereum is currently the second-largest altcoin by market capitalization.
It leads the development of smart contracts and decentralized applications.
Solana, Cardano and others are drawing attention as potential competitors to Ethereum. They make up for the shortcomings of existing coins, offer better technology and scalability, and increase the diversity of the virtual currency market.

# Types of tokens
There are broadly two types of virtual currency tokens.
Utility tokens and security tokens.
A utility token is a token that represents the right to use a specific platform or service.
When users hold the token, they can perform certain functions or receive benefits within the platform.
A security token represents ownership of real assets or company shares, similar to traditional securities.
These tokens are subject to regulations such as securities laws, and investors can expect returns such as dividends and profit distributions.

#Stablecoins
A stablecoin is a special type of virtual currency.
It is a coin designed to maintain a value pegged to a fiat currency, for example the U.S. dollar.
This allows stable transactions and investment without being affected by the volatility of other virtual currencies.
There are broadly two types of stablecoins.
- Collateralized stablecoins: coins backed by assets held by financial institutions, ex) Tether (USDT) - Algorithmic stablecoins: coins that stabilize their price through algorithms ex) TerraUSD (UST) The stablecoin that recently became a global problem was TerraUSD, an algorithmic stablecoin.