The Difference between Crypto Currency and Virtual Currency
In Germany, only Bitcoin 2013 has been recognized by the German government as a "unit of account" for legal and tax purposes. Thus, the German Federal Financial Supervisory Authority (BaFin) classifies Bitcoin as units of value comparable to foreign exchange.
Thus, most crypto currencies only fulfil a "payment function" as a side effect.
Fiat money is an object of no intrinsic value that serves as a means of exchange. The opposite of Fiat money is commodity money, such as tobacco, rice, gold or silver, which, in addition to its external exchange value, also has an intrinsic value that is independent of government decrees as long as it may be used to pay.
Today's monetary systems usually do not set the value of the currency at an official rate with a commodity. Instead, the value of the government's power to prescribe the currency as legal tender is secured. By a legal definition as means of payment in a currency constitution alone, however, it does not necessarily acquire the characteristics of money, but only through the general acceptance of trading partners (payers, recipients) also with regard to the value and exchange rate of the currency.
Fiat currencies are the most common means of payment in the world, whereby the value of a currency is primarily based on the faith of the participating partners in the currency.
The European Banking Authority (EBA) defines virtual currencies as a digital representation of value that is not created by a central bank or authority and does not need to be linked to legal tender. Virtual currencies are used by natural and legal persons as a means of exchange and can be transferred, stored or traded electronically.
Rainbow Currency is already recognised in the European Union as a virtual substitute currency for the EURO if both trading partners agree to settle a transaction with Twnkl (YEM) as a payment option.
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