You'd better start getting used to the idea of virtual currency.
While the much talked about Bitcoin is the most prominent and widely used virtual currency, it is not the only one.
Bitcoin is not even the first, as the earliest digital currencies emerged as far back as the early 1990s (most of them are long gone).
Today there are more than 80 kinds of virtual currency, with an array of odd names like feathercoin, bbqcoin, fireflycoin, and zeuscoin.
They're called virtual currency because they don't exist in the physical world as coins or paper bills. They only exist in cyberspace.
But the fact that there are so many types of virtual currency shows that this is a concept that is not going away.
And while critics like to point out that a virtual currency is backed by nothing, like gold or a national government, and has no intrinsic value, they can serve an important purpose.
A successful virtual currency enables the transfer of money between parties anywhere in the world without the need for intermediaries like banks or payment processors or the fees they like to charge.
And a decentralized digital currency like Bitcoin is also outside the control of any central bank or government.
Virtual Currency Still in its Infancy
Still, the era of virtual currency is just getting started and is littered with the bones of its pioneers. Many early efforts from the 1990s, such as Beenz and Flooz, fell victim to fatal flaws in their design.
More recently, in May of this year, the U.S. government shut down the virtual currency Liberty Reserve after an investigation showed it was used almost exclusively by criminals around the world to launder money.
And yet the digital currencies continue to grow in popularity, a testament to the power of the concept.
Bitcoin itself is a great example of the resiliency of the ideas driving virtual currency. Over its five-year history, it has endured several crashes in the Bitcoin prices, but has recovered in each instance to reach new highs.
And while Bitcoin has the advantage of being the dominant virtual currency right now, that by no means guarantees it will win out as the digital money of the future.
A lot of very smart, innovative programmers continue to work to improve upon the virtual currency concept, building on existing currencies and seeking to correct what they see as flaws.
In fact, quite a few of the new digital currencies that have emerged in the past couple of years are based on Bitcoin, but with significant tweaks.
But the world does not need or want 80 digital currencies. Consolidation is inevitable, and nearly all of them will eventually fall away. Only a handful will survive.
So the only question is, which ones?
Here are the top candidates…
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.