What is Electronic Money

The appearance of the virtual currencies provokes several legal questions beyond their economic-monetary nature. The chapter focuses primarily from a legal point of view on the emergence of virtual currencies after a brief analysis of the concept and development of money, and analyses the related possible and probable legal risks and challenges in comparison to the operation of traditional (fiat) currencies either. The author provides a brief background of the technology of virtual currencies. The chapter considers specific issues that virtual currencies raise concerning the legal regulation in several fields, for example, exchange services, taxation, salaries, lending and borrowing in virtual currencies, law enforcement, money laundering, etc. Before the author assesses the impacts and probable functions of virtual currencies, it is indispensable to have also a look at the relations between state and money through the concept of monetary sovereignty and the related compatibility issues.