A digital currency and Cryptocurrencies with Hokk Finance

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Virtual currencies, or cryptocurrencies, are appearing more and more frequently in the general media. A simple definition of what a virtual currency is is that it is a “digital medium of exchange”, that is, it is virtual money, and since it is relatively accepted, it can be used to buy and sell products and services with cryptocurrency prices.

The first fully implemented virtual currency is Bitcoin. This virtual currency came into operation in 2009 and, over time, different virtual currencies such as Litecoin (2011), Ripple (2012), or Ethereum (2015) have appeared.


As for the advantages of this system as a means of payment, the ease of making payments to companies in countries where there is no stable banking system through money that “is in virtual form” and can be converted into local currency, such as the dollar ($) or the euro (€), through intermediaries that already exist and are subject to legal regulation.

In addition, because it is not a physical element, virtual currency is also an investment vehicle, since, for example, anyone could have part of their savings in bitcoin, because they are expected to reach a high value (Cryptocurrency Market Capitalizations) due to the great interest of financial institutions.

Another of the strengths it offers is security since to pay with it you do not need to reveal any bank details. Although, one of the aspects that have raised the most controversy is that its use is partially anonymous and has been related to money laundering.

The biggest difference with respect to traditional currencies is that it is beginning to be supervised and controlled by governments or central issuers, such as the European Central Bank, in the case of the Euro (€).

However, it is in this great difference where perhaps its greatest weakness lies, since the high complexity of its operation “Proof-of-work system: proof-of-work system or System, POW”, creates a certain distrust among the common user.


One of the conclusions of the First International Conference on Electronic Money, held in Montevideo with the participation of different experts in the field, is that it will take society around 5 years to understand the concept and functionality of virtual currencies.

The main difference between a digital currency and a cryptocurrency is that digital currencies backed by central banks, such as the possible digital euro and digital yuan, may be a reality in the next few years. Unlike cryptocurrencies, such as Bitcoin and Ethereum, these currencies promise less volatility and greater security. In addition, they will have the support of their respective monetary institutions, in charge of ensuring financial stability. “The creation of a new payment system has lower costs than the means that are now available (such as SPIE, the interbank payment system) in constant surveillance of the central bank, a measure that is just beginning to take shape,” concludes Luquet.

A particular case occurred in May 2013, when the United States Department of Homeland Security began investigating the Mt. Gox website. The bankruptcy of the Mt.Gox exchange platform, which in February 2014 disappeared with 650,000 bitcoins from its depositors, warned of the advisability of regulating this type of entity. After the collapse, the president of the Federal Reserve reported that Bitcoin is an innovation that is outside the banking system and therefore was not authorized to regulate it. The European Central Bank indicates that there is no deposit protection for bitcoin funds and that it is the user himself who must directly face all these risks.

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