BANK017 Virtual currencies - funny money or legal tender? (531 words)

This interesting article explains what virtual currency is, and in particular the most popular, Bitcoin. It explains how it is created, what it is used for, and the pros and cons. Something different to share with your clients.

Virtual currencies, or cyber currencies, are both a medium of exchange and a store of value, just like traditional money. However, unlike banknotes or coins cyber currencies exist only as digital data stored in computers.

Trading in virtual currencies requires membership in an online community connected by appropriate software, with the value usually being determined by a computer algorithm or simple supply and demand.

Virtual currencies are not considered legal tender in most countries, however some, including Australia, do allow purchases using this alternative money.