What is the difference between GCash transfers, cryptocurrencies and non-fungible tokens?

E-money is a digital representation of your coins and paper money so you can electronically transfer these as if you are sending real currency (fiat).

E-money is different from digital currency because you can only electronically send funds you’ve deposited in your e-wallet. The values here do not rise or fall; rather you convert your actual cash, store it in an e-wallet (such as Gcash, Paymaya) so you don’t have to physically go to a bank or a remittance center just to send physical money.

Meanwhile, virtual or digital currencies are not only money but systems of money. This means, its values rise and fall (like the bear and bulls of stocks) usually depending on other regulators, aside from a central bank (like the Bangko Sentral ng Pilipinas). Examples of virtual currencies include Bitcoin, Litecoin, and XRP.

Cryptocurrencies are a type of virtual currency that uses cryptography– a method of storing and transmitting data that is only readable to the intended receive so he can process it (in a way, imagine that your Crypto Wallets can only be read and accessed through the address it is designated).

Note that in making payments, you need to send a request to a “miner” who will give you an encryption key (imagine, an address where) you can buy and sell the crypto. These miners have a ledger of their own, an accounting record, to verify your transactions. Once verified, the transaction is broadcasted to all users and their ledgers are updated. This entire process is a stark difference compared to e-money where you only have to type the value of money you want to transfer and the phone number you want to send it to.

On the other hand, non-fungible tokens (NFTs) are digital assets. Imagine this: both NFTs and crypto are built on Blockchain or a system that link your network with other traders (also called as Peers). As a result, those who are into crypto will most like be into NFTs since these run through the same technology and under the same principles.

The main difference between crypto and NFTs is that crypto are currencies, while NFTs are assets or products. You use crypto to buy NFTs. Meanwhile, you use NFTs (such as the arts you draw) to sell royalties.

Imagine that crypto is the money you use to buy a painting, while the painting is the NFT. Because of this, you can only recognize profit through crypto. There’s no profit in NFTs, unless you sell it using crypto.

Can you compel someone to receive virtual currencies as payment?

Note that you can only compel someone to receive a certain currency if it is legal tender. Legal tender is the currency which a debtor can force a creditor to accept in payment of a debt when you give the right amount. Currently, these are coins and paper notes which are issued by BSP and fully guaranteed by the government (Section 52, New Central Bank Act).

This means that when you pay for something (either because of sale or loan), the creditor cannot refuse you. He can’t say he doesn’t want to receive the money. Once you pay the appropriate amount, it extinguishes the debt.

As such, you cannot compel someone to receive a check, or a US dollar because these are not legal tender here in the Philippines. The practical reason here is that checks can be dishonored, while US dollar values can fluctuate. More so, you cannot force someone to accept crypto or NFT as these are generally unregulated. Therefore, creditor has an option not to accept all of these.

However, since e-money is only a digital representation of fiat currency for the purpose of easier transfers, the BSP has considered it to be of legal tender. Thus, once you electronically transfer an amount equivalent to or similarly denominated as the fiat currency you owe, the creditor cannot decline it. In case he does, you can seek assistance from the courts.