Cryptocurrency is not virtual money

More than 2 months ago, on a Facebook group called "Pi Network Hai Duong", an account posted content that included the sentence "advising everyone to mine Pi", along with the article was an image of a VTV1 program with a photo of the virtual currency Pi.

The program on VTV1 channel mentioned above is "HiTech Future Technology" which aired at 8:00 p.m. on April 18, 2024. The above image was taken from a content segment about legal issues related to virtual assets and did not contain any advice for people to "mine Pi". The post of the above Facebook account still exists until now, not only on that group but also on the personal page.

The issue of cryptocurrency and virtual currency has been raised and discussed more heatedly in recent days, when from July 1, 2024, Decree 52/2024/ND-CP dated May 15, 2024 of the Government regulating non-cash payments took effect, including regulations on cryptocurrency.

I have heard many people say things like "Vietnam has now recognized cryptocurrency, which means Bitcoin and Pi transactions are now public", and many others chimed in like "See, I told you, it will be public anyway". Maybe it's because many people don't understand cryptocurrency well, mistaking virtual currencies like Bitcoin, Pi... as cryptocurrency. Or maybe it's because some people take advantage of that lack of understanding to propagate and entice people to "get rich by mining virtual currency".

It is affirmed that Vietnam has not recognized virtual currency as an asset. The provisions on electronic currency in the above decree also clearly state that electronic currency is the value of Vietnamese Dong stored on electronic means, provided on the basis of the amount paid in advance by customers to banks and organizations providing intermediary payment services providing electronic wallet services. According to this decree, the two means of storing electronic currency are electronic wallets and prepaid cards.

In short, electronic money is a representation of the central bank's legal tender, issued in the form of paper money but the holder stores it in electronic form in their phone, computer... The most obvious is the money we have in our bank account, which can be withdrawn as cash at any ATM system or directly at the bank counter.

With e-wallets, in principle, e-wallets must be linked to a bank account, from which money can be transferred from the bank account to the e-wallet for transactions as needed. The nature of e-wallets does not create money by itself.

So how should we understand coins like Bitcoin and Pi correctly? There are two concepts that need to be clearly understood. First, virtual currency is similar to electronic currency in that it coexists on the internet. However, this is not a type of currency issued by the State Bank, but by an organization or individual. They have full control over the amount of virtual currency issued. Virtual currency is recognized and used in a specific community for many different purposes. The most obvious is the virtual currency commonly found in video games.

Another type of money, cryptocurrency, is often referred to as "Crypto-Currency" or "Crypto" for short. This type of money is created from complex cryptographic algorithms, and transactions are recorded on a "cryptographic ledger" called blockchain technology. Bitcoin is such a type of money.

Confusion and misunderstanding about the nature and names of each type of currency as above have caused many people to mistakenly believe that Vietnam has recognized Bitcoin, or another form of currency called Pi. In the current world of virtual currency and crypto currency, Pi is "famous" with the claim that tens of millions of people participate.

This Pi coin project is advertised as being able to “mine” for free on the phone using the Pi Network application. After installing the application, the user’s Pi account will automatically increase on the condition that the application is opened to “check in” every day. The more people invited to participate, the faster the “mining” speed will be. Pi has been a hit in Vietnam and attracted many participants because of the idea of ​​not having to spend money but only needing to open the application every day. However, to verify their identity, users must provide a photo of their ID card and provide some other personal information.

Imagine, an application that is on many people's phones, and requires a lot of access rights such as contacts, network information, biometrics... what information can it get? It can be deeper, more private and sensitive data, not just common information and data such as name, phone number, Facebook account...

"Playing" with virtual money and cryptocurrencies requires a deep understanding of them, don't be "dumbfounded" and one day bring disaster upon yourself.