Digital currency in the context of "Cryptocurrency"

Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.

Traders generally negotiate through a medium of credit or exchange, such as money. Though some economists characterize barter (i.e. trading things without the use of money) as an early form of trade, money was invented before written history began. Consequently, any story of how money first developed is mostly based on conjecture and logical inference. Letters of credit, paper money, and non-physical money have greatly simplified and promoted trade as buying can be separated from selling, or earning. Trade between two traders is called bilateral trade, while trade involving more than two traders is called multilateral trade.

In economics, a medium of exchange is any item that is widely acceptable in exchange for goods and services. In modern economies, the most commonly used medium of exchange is currency. Most forms of money are categorised as mediums of exchange, including commodity money, representative money, cryptocurrency, and most commonly fiat money. Representative and fiat money most widely exist in digital form as well as physical tokens, for example coins and notes.

The origin of "mediums of exchange" in human societies is assumed by economists, such as William Stanley Jevons, to have arisen in antiquity as awareness grew of the limitations of barter. The form of the "medium of exchange" follows that of a token, which has been further refined as money. A "medium of exchange" is considered one of the functions of money. The exchange acts as an intermediary instrument as the use can be to acquire any good or service and avoids the limitations of barter; where what one wants has to be matched with what the other has to offer. However, there is little evidence of a pre-monetary society in which barter is the primary mode of exchange;instead, such societies operated largely along the principles of gift economy and debt.

Virtual currency, or virtual money, is a digital currency that is typically unregulated, issued and usually controlled by its developers, and used and accepted electronically among the members of a specific virtual community as part of a virtual economy. In 2014, the European Banking Authority defined virtual currency as "a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically." A digital currency issued by a central bank is referred to as a central bank digital currency.

A central bank digital currency (CBDC) is a digital version of a country's official currency, created by the nation's central bank rather than by private companies. Unlike cryptocurrencies such as Bitcoin, CBDCs are issued by a state and may work alongside physical cash. As of 2024, the Bahamas, Jamaica, and Nigeria have launched CBDCs, and 134 countries are researching their own versions while other jurisdictions, such as Florida, have banned CBDCs citing privacy concerns.

CBDCs could enable faster, cheaper payments and improve financial inclusion, but raise concerns about privacy and the potential for them to be used as a "tool for coercion and control". CBDC implementation could affect banks' financial stability, requiring careful policy design.

Ransomware is a type of malware that encrypts the victim's personal data until a ransom is paid. Difficult-to-trace digital currencies such as paysafecard or Bitcoin and other cryptocurrencies are commonly used for the ransoms, making tracing and prosecuting the perpetrators difficult. Sometimes the original files can be retrieved without paying the ransom due to implementation mistakes, leaked cryptographic keys or a complete lack of encryption in the ransomware.

Ransomware attacks are typically carried out using a Trojan disguised as a legitimate file that the user is tricked into downloading or opening when it arrives as an email attachment. However, one high-profile example, the WannaCry worm, traveled automatically between computers without user interaction.

Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.

Traders generally negotiate through a medium of credit or exchange, such as money. Though some economists characterize barter (i.e. trading things without the use of money) as an early form of trade, money was invented before written history began. Letters of credit, paper money, and non-physical money have greatly simplified and promoted trade as buying can be separated from selling, or earning. Trade between two traders is called bilateral trade, while trade involving more than two traders is called multilateral trade.