What are the forms of virtual currency?

Virtual currencies are mainly divided into 6 forms: legal currency-backed, commodity-backed, asset-backed, debt-backed, usage-based and equity-based.

Virtual currency forms

Virtual currencies can be divided into the following main forms according to the assets and uses behind them:

1. Legal currency-backed

• Virtual currency backed by a government or central bank, such as a central bank digital currency (CBDC).
• Value is pegged to a specific fiat currency, usually 1:1.
• Usually issued and regulated by the central bank.

2. Commodity-backed

• Virtual currency backed by physical commodities (such as gold, silver or oil).
• Value is tied to the market value of the supporting goods.
• Aims to provide a stable store of value and reduce volatility.

3. Asset-backed

• Virtual currency backed by real-world assets (such as real estate, stocks, or bonds).
• Value is tied to the value of the supporting asset.
• Provides digital access to traditional asset ownership.

4. Debt-backed

• A virtual currency backed by debt commitments.
• represents a debt owed to a specific entity or person.
• Value is tied to the value of the debt represented.

5. Usage type

• A virtual currency used as a medium of exchange for a specific network or ecosystem.
• Value is driven by its utility within that particular network.
• does not necessarily have intrinsic value or external support.

6. Equity type

• A virtual currency that represents equity in a company or organization.
• Value is linked to the performance of the represented company and market demand.
• Provides digital equity ownership and potential earnings.

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