Virtual currencies are increasingly part not only of the virtual world but also of the real world. Virtual currencies pose many problems. Due to its similarity to paper money, many questions have arisen regarding its acceptance by market participants. Virtual currencies are growing in popularity and, although they are widely used by speculators who see them as a way to make money by buying them at lower prices and selling them at higher prices (much like currency trading). According to Zakary M. Seward (2013), “Virtual currencies are considered a form of electronic money or payment system technology area that has evolved over the past 20 years” (Seward, 2013). Virtual currencies such as Bitcoin are not issued by the central bank; instead, they are created or operated by a group of anonymous programmers under the name Satoshi Nakamoto (Barry, 2014). Bitcoin can be sent and received over the Internet, similar to sending digital money. The currency is exchanged via the decentralized Bitcoin network, without going through an external financial institution or government. Virtual currency is a big deal. People around the world can exchange virtual currencies for traditional currencies through online services. Many customers exchange goods and services using a virtual currency such as Bitcoin. If people buy bitcoins, they are not physically purchasing goods by handing notes or tokens to the seller. They are used for purchases and electronic transfers. Many large companies use virtual currency. For example, Apple offers iTunes users the ability to purchase prepaid iTunes gift cards that contain credits that can be redeemed for music and movies. You...... middle of paper ......in Perklberg (2013), The Fed does not have the power to supervise virtual currencies but that they may be promising in the long term, particularly if innovations promote a faster, safer and more efficient payment system (Perklberg, 2013). The Chinese government has banned Chinese banks from carrying out transactions using bitcoins. The Reserve Bank of India also warned bitcoin users, holders and traders of the financial, legal, customer protection and security risks they face. Overall, virtual currency is a new concept, but it is on its way to being understood and adopted by a growing number of consumers, merchants and investors around the world. Virtual currency presents certain technological and financial risks. More consumers, merchants and investors should start learning about and using virtual currency..