Lesson 1.

Virtual Currency
LESSON OBJECTIVES:

At the end of the lesson, the students should be

able to:
1. explain the meaning of virtual currency;
2. differentiate fiat money and e-money
3. discuss what a virtual currency exchange is;
4. elaborate on blockchain technology;
5. distinguish between centralized and
decentralized relevant to cryptocurrencies; and
6. elucidate on the top six 5-star cryptocurrencies.
Cryptocurrency or
Virtual/Digital
Currency
 What is Cryptocurrency?

• called crypto-currency or crypto, is any form of currency that exists digitally or virtually
and uses cryptography to secure transaction.
• It has given people a chance to grow their money and build their wealth.
• hance to grow their money and build their wealth. WallStreet seemed so hesitant about
"digital gold," a name they use to refer to cryptocurrency, to invoke amargin of safety
Cryptocurrencies or what they call "altcoins"-are up-and-coming coins that can bebought
for cheap price.
 EXAMPLE:
$1,000 invested in Ethereum's initial coin offering (ICO) (when the EthereumFoundation
launched the Ethereum Mainnet on July 30, 2015) would be worth $3.3 million
today(investorplace.com 2021). Ethereum's ICO participants received Ether, which is
used as "gas" or "fuel" tocompensate for computations performed on the network.
What is Virtual and Digital Currency?
Virtual Currency Digital Currency

onlinetransact

currency that
not issued or

this currency
centralbanks
• is generally used for

government

users create
"any type of digital unit that isused

authorities.

community

is generally
online, it is

ions. Since
backed by

used for
onlinetransactions. Since

digital
as a medium of exchange or a form

or
of digitally stored value generated community users create this
by agreement within thecommunity currency online, it is not issued
of virtual currency users." or backed by centralbanks or
government authorities.

Virtual currencies can also be • Does not have a physical and

exchanged to

ugh different
fiat/cashthro
can also be

exchanges.
exchanged to and from tangible form, such as a
currencies

channels,
and from

currency
through
mostly
Virtual

virtual

fiat/cashthrough different channels, dollar bill or coin, and is

mostly through virtual currency accounted for and
exchanges. transferred using online
system.
 Fiat Currency/Fiat Money
• Fiat money/fiat currency or cash, on the other hand, is the real currency. Coins or paper (bills) issued and
printed by the central bank of a country are flat currency, full-backed by the government of a country and
is acceptable as a payment for public and private debts.
• Some examples of fiat money are the Philippine Peso (PHP), United States Dollar (USD), or Japanese Yen
(JPY).

Example:

PHP(Philippine
JPY(Japan Yen) USD(United States Dollar)
peso)
 E-money or Electronic Money
• Electronic money is money which exists only in banking computer systems and is not held
in any physical form.
• Electronic money or e-money, is the money balance recordedelectronically on a stored-
value card.
• it may refers to several systems which enable a buyer to pay electronically by transmitting
by a unique number (called digital certificate) similar to a banknote number.
• In economic terms electronic money is monetary value provided by the issuer on demand,
expressed in government or private monetary units stored in electric form on an electric
devices.
• It is a digital representation of fiat currency stored in digital wallets or e-wallets. Any
amountof currency stored in an electronic wallet (such as GCash, PayMaya, Coins PH,
GrabPay, and the like) is e-money, which can also be accepted as a "card payment" or can
be withdrawn right away as cash.
Example:
VIRTUAL CURRENCY
 What is Virtual Currency?
• Virtual currency is stored digitally, would still need to be converted first Philippine
peso thentransferred to a destination wallet or be withdrawn as cash through
different mediums that areaccepted in the country.
• In general, conversion is done through a virtual currency exchange.
• Virtual currency exchanges are licensed to convert cryptocurrency to Philippine peso
and vice versa. In thePhilippines, cryptocurrencies are regulated by the Bangko
Sentral ng Pilipinas (BSP). In fact, 17 virtualcurrency exchanges are registered with the
BSP and authorized to operate in the Philippines. AtomtransTech; Betur, Inc
(Coins.ph); B Express (Bexpro); BloomSolutions;
• Virtual Currency Philippines, Inc.are some of the licensed virtual currency exchanges
in the Philippines (bitpinas.com 2021). With thecountry being the third largest
recipient of remittances globally, many firms are applying for a license tobecome a
virtual currency exchange in the Philippines. Such an exchange can deal with crypto
to flat andfiat to crypto transactions. The BSP reported that there are a number of
companies applying to have alicense to operate in the country as a virtual currency
exchange.
 Blockchain
-is an immutable digital ledger that enables
secure transactions across a peer-to-peer
network. It records, stores and verifies
data using decentralized techniques to
eliminate the need for third parties, like
banks or governments. 

Each block is encrypted for protection and

chained to the preceding block — hence,
“blockchain” — establishing a code-based
chronological order.
 Benefits of Blockchain

Improved Accuracy By providing a fully transparent,

single-source-of-truth ledger, where transactions are
recorded in a chronological and immutable manner,
the potential for error or discrepancy drops when
compared to centralized databases or manual record-
02 keeping processes.

More Security Cryptography and hashing

algorithms ensure that only authorized users are 01
able to unlock information meant for them, and
that the data stored on the blockchain cannot be
Higher Efficiency Aside from saving paper,
manipulated in any form.
03 blockchain enables reliable cross-team
communication, reduces bottlenecks and
errors while streamlining overall operations.
Why Blockchain is Important?
Blockchain is a revolutionary technology because it helps reduce security risks,
stamp out fraud and bring transparency in a scalable way. Popularized by its
association with cryptocurrency and NFTs, blockchain technology has since evolved
to become a management solution for all types of global industries.
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Blockchain in Healthcare: Blockchain for Food:

-used for everything from -is being championed as a

securing patient data to solution to prevent
managing the pharmaceutical foodborne illnesses or lost
supply chain. product order.
Cryptography
 What is Cryptography?

• practice of securing communication and data in the presence of adversaries.

• It involves techniques for protecting and verifying the integrity of information,

ensuring its confidentiality, and authenticating the identities of the parties involved
in a communication or transaction.

• Cryptography is the backbone that enables secure and verifiable transactions in a

decentralized environment, without the need for a trusted third party such as a
bank or financial institution.
 THE PILLARS OF CRYPTOGRAPHY
TO CRYPTOCURRENCIES:
There are three primary cryptographic concepts that
underpin the functioning of cryptocurrencies: Public-key Cryptography

In the context of cryptocurrencies,

public-key cryptography is used to
create and manage digital wallets.
A hash function is a mathematical algorithm that Each wallet has a public address
takes an input (or “message”) and returns a fixed- (derived from the public key) and a
size string of bytes, typically a “hash” or “digest.” corresponding private key. The public
The output is unique to the input, meaning that address is used to receive funds, while
even a slight change in the input will produce a the private key is required to authorize
vastly different output. transactions from the wallet
Digital Signature
Digital signatures are cryptographic mechanisms that
allow individuals to sign digital documents or
messages, proving their identity and the authenticity
of the content. In cryptocurrencies, digital signatures
Hash Function are used to verify that a transaction has been
authorized by the rightful owner of the funds being
transferred.
Understanding Centralized and
Decentralized
Centralized Cryptography Decentralized Cryptography

Centralized Cryptocurrencies are digital Decentralized Cryptocurrencies  operate on

currencies that are controlled by a single entity a network where all participants have equal
or organization.This could be a central bank, a power and control. These types of
specific company, or even a government cryptocurrencies are not controlled by any
institution. The central authority has the power to single entity or organization, but rather by a
regulate the supply of the currency, dictate network of peers. In a decentralized
transaction rules, and potentially even view and cryptocurrency network, transactions are
control individual transactions. Advantages of verified by a distributed network of computers,
centralized cryptocurrencies often include faster also known as nodes. This means that no
transaction times and lower transaction fees, as single entity has the power to control or
there is a central authority that can process manipulate the transaction data.
transactions quickly and efficiently.
 DIFFERENCE BETWEEN
CENTRALIZED AND DECENTRALIZED
The main difference between centralized and decentralized cryptocurrencies lies in who controls the
network.

Centralized cryptocurrencies have a single entity

or group in charge, making decisions about
development, governance, and even token
distribution. This creates a single point of failure
and potential for manipulation.
S
T
Decentralized cryptocurrencies distribute control
across a network of users, using consensus
mechanisms to validate transactions and make
decisions. This makes them resistant to censorship
and manipulation, but can be more complex to
manage.
Top Six 5 Star
Cryptocurrencies
The Top six 5 star rated digital currencies today as
ranked by Louis Navellier
Louis Navellier
Known for growth investor,champion for individual investor, and portfolio and
diviend grader

ADD YOUR TEXT ADD YOUR TEXT

1.Etherum or Ether ETH 2.Bitcoin BTC

First describe in a 213 whitepaper by Vitalik Most widely adoted cryptocurrency. Bitcoin has
Buterin, Buterin, along with other co decentralized digital currencies and created a
founders, secured funding for project in an disruption in the financial world. Many called
online public crowd sale in the summer of bitcoin the gold cryptocurrency. It was released
214 and officially launched the blockchain by 2OO9 by the pseudonymous Satoshu
on july 3O 2O15. Formed by each and Nakamoto and quickly became the standards for
everyone of the computers that work virtual cryptocurrencies. Bitcoin hast the largest
verifying operations in the blockchain, also market capitalization of approximately US$ 92O
called miners. billion.
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3.O Ripple XRp 4.Stellar (XLM)

The odd duckling of the cryptocurrency world, -is a decentralized network designed for
but XRp is the largest currency to have 1Ox fast and cost-effective cross-border
potential for 2O21. Compared to bitcoin and payments. Founded in 2014 by Jed
other cryptocurrencies, XRp transaction are McCaleb, Stellar operates on a
much cheaper and faster. Ripple (XRP) is a decentralized ledger maintained by nodes
cryptocurrency and the native token of the XRP running the Stellar software. Its native
Ledger, an open-source blockchain designed to cryptocurrency, Lumens (XLM), facilitates
facilitate global financial transfers and currency transactions with minimal fees. Stellar's
exchange. It operates independently of Ripple key features include cross-asset transfers,
Labs, a cryptocurrency services and technology a decentralized exchange, and support for
company that uses XRP in its payment platform smart contracts. The network has
to enable transactions between financial partnerships with companies like IBM and
institutions, businesses, and organizations. MoneyGram.
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5.Cardano (ADA)

-is a blockchain platform aiming to be a more scalable, interoperable, and sustainable alternative to
existing platforms like Bitcoin and Ethereum. It uses a Proof-of-Stake consensus mechanism, making it
more energy-efficient and scalable than Proof-of-Work systems. Cardano's architecture is divided into
two layers: the settlement layer (Cardano Blockchain) and the computation layer (Plutus), allowing for
greater flexibility.
Cardano's strengths include its environmental sustainability, scalability, security, and decentralization.
However, it faces challenges like competition from established platforms, slower adoption rates, and a
limited dApp ecosystem.
Despite these challenges, Cardano continues to evolve and develop new features, aiming to become a
leading platform for decentralized finance, NFTs, and other blockchain applications. Its focus on
innovation and growing ecosystem make it a potential force in the future of blockchain technology
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6.Dogecoin (DOGE)

-is a cryptocurrency that gained popularity as a meme coin, featuring the iconic Shiba Inu dog from
the "doge" meme. Created in 2013 by Billy Markus and Jackson Palmer, Dogecoin quickly became
known for its playful and community-driven nature. With no cap on its supply and based on the Scrypt
algorithm, Dogecoin allows for fast transactions with a block time of one minute.

The rise of Dogecoin's popularity can be attributed to factors such as strong community support, social
media hype, and notable endorsements from figures like Elon Musk. However, it has faced criticisms
for its lack of utility beyond its meme status, price volatility, and concerns about centralization.
Instructions: Choose the best answer for each question.

1. What is the main purpose of a blockchain in the context of virtual currencies?

a) To store user passwords and personal information.
b) To track and verify transactions securely.
c) To regulate the price of cryptocurrencies.
d) To provide a central authority for cryptocurrency management.

2. Which of the following is NOT a characteristic of cryptocurrency?

a) Decentralized
b) Secure
c) Regulated by governments
d) Digital
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3. What is the process of adding new transactions to the blockchain called?

a) Trading
b) Mining
c) Staking
d) Hodling

4. What is the main benefit of using a Proof-of-Stake (PoS) consensus mechanism compared to Proof-of-Work
(PoW)?
a) It is more secure.
b) It is more energy-efficient.
c) It is faster.
d) It is more decentralized.

5. Which of the following is NOT a popular cryptocurrency?

a) Bitcoin (BTC)
b) Ethereum (ETH)
c) Dogecoin (DOGE)
d) Facebook (FB)
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