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Virtual Currency
Virtual currency is a type of digital currency that is created, stored, and transacted entirely electronically. Unlike traditional currencies issued by governments (fiat money), virtual currencies are typically decentralized and may operate on blockchain technology. Examples include cryptocurrencies, gaming currencies, and even airline miles.
Virtual currency offers benefits including lower transaction costs than traditional payment processing, faster transfers, and increased privacy. It also presents unique challenges, particularly in the areas of payment fraud, identity verification, and ensured compliance. The anonymity and cross-border nature of virtual currencies can facilitate money laundering and similar illicit activities.
Businesses and regulatory bodies rely on measures such as Know Your Customer (KYC) protocols, anti-money laundering (AML) regulations, and transaction monitoring systems. These safeguards help ensure the secure and lawful use of virtual currency.
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