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Virtual Currency Will Not Replace Sovereign Currency

2800 words - 12 pages

Virtual currency is currency people can use to make payments in virtual environments like gaming and social networking sites. It is possible to earn it by completing tasks in the virtual environment or simply participating for a set period of time, and users can also buy it, converting real currency into virtual, usually at a very favorable exchange rate. Virtual currencies like Bitcoin, Ripple, Litecoin and others have developed rapidly these years. Compared with traditional currency, virtual currency differs in many aspects. However, will virtual currency be able to take over traditional currency in the future? Economists have different idea on this question. The essay is presenting the ...view middle of the document...

More and more transactions are being facilitated through the internet, our mobile phone, credit cards etc. Paper money is used less and less. (Chang 2013)

There is one premise in this claim, which is with more transaction done online, by phones and credit cards. And the conclusion of it is paper money is becoming useless.
To support the premise, according to eMarketer’s statistics, in 2013 there will be 1,150,000,000 people who chose to shop online.

On November 11th, 2013, the total amount of the transactions on Taobao and Tmall, paid by Paypal, was 35,000,000,000. It accounted for 50% of the social total retail sales of consumer goods per day. (The Turnover of Tmall Reached 35 Billion 2013)

According to this, the numbers can be seen as proof to support the popularity of the online shopping. The numbers come from Alibaba Group, which is one of the world's most famous e-commerce brands and the number one online marketplace for global and domestic China trade, owned Taobao and T-mall. However, the reliability of the numbers should be further considered. When it declared the trading amount reached 3,000,000,000,000, it also reported T-mall had sold 2,000,000 underpants, of which the combined length would be over 3,000 kilometers. After calculation, according to the report, if the 2,000,000 underpants’ combined length is 3,000 kilometers, then each one of the underpants should be 1.5 meter in length. How could that be possible? After netizens raised this question, it declared that there was a little mistake in their calculation. So the numbers of the amount of that day’s online transaction should also be deniable.
Besides, the premise in it is more transactions are being facilitated through the internet, mobile phone, credit cards. But it does not lead to the conclusion that virtual money is better. Though paper money becomes useless, virtual currency is not popular to cover the cost. Electronic money is now used widely. People pay by credit cards rather than paper money. It just shows the popularity of electronic money rather than virtual currency. The two concepts are quite different. Electronic money is still part of the sovereign currency. But here this point is misleading and cannot be convincing. And by stating this cannot contribute to the argument that virtual currency is better than sovereign currency. Now more shopping websites accept cash on delivery, such as Amazon and In this way traditional currencies like paper money can be easily used.
Another claim supporting this argument is from KPBJ (Kitsap Peninsula Business Journal):

Small merchants reportedly like the virtual money because it costs less for transactions than credit cards. (Tollefson 2014)

The premise in this claim is that virtual money costs less for transactions than credit cards. It leads to the conclusion that small merchants like the virtual money. It shows the reasons for why small merchants like the virtual money. It is cheaper. It cost...

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