Cryptocurrencies: Basic Guide 💰

The arrival of the internet has allowed us to revolutionize the way we live today, normal activities that we did in person, we can do them online. We see this with cryptocurrencies, since such has been the impact of technology that it is said that money could evolve to the digital world.

Cryptocurrencies are one of the most trending concepts, because more than fiction, they are already a reality. Here we will tell you everything you need to know about these currencies so that you fully exploit all the potential they have for you and your finances.

✨ What are cryptocurrencies?

A cryptocurrency is a virtual unit which has a value and can be used for exchanges and transactions such as purchases, sales and payments. Cryptocurrencies are virtual and their value is based on a series of algorithms and complex mathematical problems in a system known as Blockchain.

Both the value and stability of cryptocurrencies are found in the way the Blockchain works. The more people join their operation through their open source code, the more value these cryptocurrencies acquire and the more their volatility is reduced.


✨Main characteristics of cryptocurrencies

Despite being considered as virtual money, not physical or traditional, by regulations around the world, cryptocurrencies are increasingly relevant. Here we will tell you what are the characteristics that distinguish this type of coin from any other kind of money.

  • Outside of traditional regulations: The value of cryptocurrencies is based on trust, the number of operations performed, and the law of supply and demand., this makes them immune to political decisions. This is due to the fact that its operation is not regulated by banking institutions or traditional organizations.
  • Approves economic crises: While cryptocurrencies are not entirely immune, they are proof of conventional economic crises. As they do not belong to the conventional financial system, they have the ability to better resist fluctuations in the economic market. In addition, they can withstand asset value declines and even political crises.
  • Lower cost of use: Cryptocurrencies do not have long chains of intermediaries with each other such as banks, networks, and payment processors. This significantly reduces operating or usage costs. The commissions are much lower which helps to make its use more accessible.
  • They are global: Another of the most striking characteristics of cryptocurrencies is that they operate globally, that is, they are not limited to a country itself. You can use cryptocurrencies in any country thanks to the fact that they are global and universal, This is thanks to the fact that they are not physical currencies or subject to policies.
  • Safe and private: As if that were not enough, the BlockChain technology behind these cryptocurrencies makes them much safer to operate. Their level of encryption makes breaking them very difficult. What's more, the operations are done in anonymity which guarantees the protection of your information.

✨Difference between Token and Cryptocurrency

It is very common to confuse both concepts, although you should know that Token and Cryptocurrencies are something totally different. A Token is a representation of a unit of value which is used in any asset such as gold, shares, rights and more, not only in cryptocurrencies.

On the other hand, cryptocurrencies are a virtual and cryptographic means of payment which is used for operations or transactions such as purchase, sale and exchange, as well as for investments. In a nutshell, Cryptocurrencies are a currency or virtual currency while a Token is a representation of the value of an asset, action, etc.

✨ How does the Blockchain work?

A Blockchain is a huge network of information about transactions and movements, that is to say, a kind of giant and virtual ledger. This is made up of a series of nodes and blocks which are in charge of each user.

Instead of having intermediaries, as in a bank, it is the users who are in charge of operating this accounting network. Another way of looking at the Blockchain is as a huge bank where each node is a user and each link is a series of transactions, information and processes managed by the same users.

Similarly, We can consider the Blockchain as a huge database which stores the information of the transactions. The way in which it generates value is in the trust that users have in the Blockchain, the way in which the data is processed and the number of transactions carried out.

All this is protected by a series of complex mathematical problems, algorithms and encryption layers. This makes it very difficult to violate them, since, if each node is not synchronized, it is impossible to know the complete information and access the network.

✨What is cryptocurrency mining?

LCryptocurrency mining is a process in which users, miners, are in charge of solving mathematical puzzles and algorithms to find cryptocurrencies. By solving these problems, cryptocurrencies are found which are added to the network.

For this, a block is formed which is subject to the approval of the network users. If the transaction is approved, the block joins the chain and the miner receives his cryptocurrency. This process requires a very large operation, since requires very powerful computer equipment to solve the algorithms.


✨How many cryptocurrencies are there in the world?

The world of cryptocurrencies has grown exponentially in recent years, that is why it is increasingly common to find these cryptocurrencies. Today it is estimated that there are more than 1,500 virtual currencies.

Take into account that not all have the same value and support. For example, Bitcoin is one of the most recognized currencies while Ethereum is the one that has been acquiring the most value. There are also currencies that do not end up taking off due to their volatility and low value.

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About Pedro Martinez Gonzalez

I'll tell you a little about myself! I am a financial analyst and economist with a master's degree in finance.

About my studies: I studied at the University of Salamanca for a Degree in Economics and then did a Master's in Finance in Madrid.

Do you want more information? You can read more about me here in my biography.

2 comments on «Cryptocurrencies: Basic Guide 💰»

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