Definition of Cryptocurrencies
The Cryptocurrency or Digital Currency are virtual coins that
use a digital encryption for their operations, and which can perform financial
transactions without intermediaries. These digital currencies use cryptography
to create safer economies, with greater privacy and that do not respond to the
control of any country or institution, since they are totally decentralized.
What is Cryptocurrency?
“crypto-currency” came into use after the publication of an article
telling about Bitcoin – the digital currency and the payment
system. Bitcoin is the brainchild of Satoshi Nakamoto, but what kind of
person or group of people is hidden behind this pseudonym, is still not known
for certain. The concept of a decentralized payment system Nakamoto was
presented on October 31, 2008. Its main principles are: anonymity for all
participants, protection from fraud and independence from controlling organizations.
The bitcoin network
consists of interrelated transaction blocks. Each subsequent block
contains information about the previous one, so you can build them into a
single chain and get information about all the transactions that have been
committed before (but not about the owners of bitcoins). The process of
creating new blocks is called mining. In order for a new block to appear
on the network, it is necessary to generate a cryptographic signature for
it. As a reward you get new bitcoin. By the way, their issue is not
an endless process. It is known in advance that no more than 21 million
bitocoins can be created.
At first, it was
relatively easy to create blocks, and the lone miners did it. Over time,
the complexity grew, for mining required solid computing power, so the miners
began to pool and produce new bitcoin by joint efforts.
What are virtual currencies (Cryptocurrency) for?
The Cryptocurrencies are a type of digital currency , so they
have the same use as any other physical currency, but with the difference that
we can not touch it. With virtual currencies you can make payments between
people and, in addition, there are already several companies that support this
type of currency, although it is true that it is not yet widespread. Some
companies such as Destinia, Dell or Microsoft already allow purchases to be
made through their web pages with bitcoins, the most widespread digital
currency in the world.
But not only it is possible to pay with cryptocurrency in web
pages, and some stores and physical stores that allow you to pay for your
purchases with this type of coins are beginning to emerge . This is still
difficult to see, but who knows if in the near future we will pay for our
purchases in stores with digital currencies. It should be noted that in order
to make payments with any type of cryptocurrency it is necessary to have an
account that contains them. Just as we have debit cards with euros, pounds or
dollars, it is also possible to have cards with Bitcoins.
As is the case in the forex market, there are many people who
use cryptocurrency to make investments that will produce benefits in the future
. Bitcoin, for example, has experienced strong increases in a very short time,
increasing its value exponentially. There are several types of cryptocurrencies
that exist and people already speculate with their value, as many people do
with the stock market to earn money.
Cryptocurrencies and Physical Currency
we compare Cryptocurrencies with Physical or Real money, we can observe a
series of advantages:
Decentralized: Cryptocurrency is not controlled by any
State, bank or financial institution.
Anonymous: Cryptocurrencies allow you to preserve your
privacy when making transactions.
International: Can be used in any country in the world
Your coins belong only to you and can not be intervened by anyone.
Intermediaries: Transactions are carried out
directly from person to person.
Faster: Transactions are much faster than
transactions through financial entities.
Use: Its use is voluntary and not
imposed by force as with traditional coins.
How do Cryptocurrencies work?
As its name suggests, Cryptocurrencies use cryptographic
techniques to safeguard the currency’s security , thus ensuring that the
currency can not be falsified in any way. Each person has their cryptographic
keys that are necessary to perform any type of operation.
These currencies coins are managed through a database called Blockchain
or chain of blocks, in which all the operations made by any user of these
virtual currencies are permanently registered. In addition, to improve security
it is necessary that the currency community approve each operation, so that
transactions can not be duplicated, since if one transaction has been accepted,
another transaction can not be accepted. It is also necessary to have an
electronic wallet that allows you to store your digital coins.
To understand it, we can explain it in a simpler way. A
person owns 3 bitcoins, which is the currency most known and used, which only
belong to him and which have some keys that allow him to carry out his
operations. All the operations that you carry out, which you can pay for
products and services, or make transfers, are registered in the database, but
privacy is respected, since no one can know what the name of the person behind
those bitcoins is. . This is why it is very important not to lose the keys that
allow us to manage virtual currencies, since we are likely to run out of money.
There are many ways to get Bitcoins , some unthinkable for
people who do not know the world of Cryptocurrency. Therefore, we recommend you
to know how to get bitcoins and Cryptocurrencies for your electronic wallet.
list some of the main Cryptocurrencies:
Bitcoin: (BTC), born in January 2009, based on the proof-of-work protocol ,
is the first Cryptocurrency for value, the first to be known in bulk, and to be
recognized as a form of payment from various Internet sites, including those of
the deep web .
Litecoin: (?), is the second largest virtual
currency. Created in 2011 by an MIT graduate and a former Google engineer (
Charlie Lee ), it is based on a global point-to-point payment network that
enables instant , near-zero cost payments anywhere in the world. Litecoin is a
global and open source payment network that is completely decentralized and
without central authorities. Also based on complex mathematical operations,
Litecoin says it offers faster transaction confirmation times and improved
storage efficiency over its main rival, Bitcoin.
Dashcoin: (DSH), is a more secret version of Bitcoin. Although Bitcoins are
anonymous when compared to traditional money, there is still a record of all
the transactions carried out in an accounting book (or “blockchain”)
that can reveal a large amount of information. Dashcoin offers more anonymity
because it works in a decentralized master code network that makes transactions
almost impossible to follow. Launched in January 2014, it was created and
developed by Evan Duffield under the name of Darkcoin, although it has changed
Peercoin: (PPC), (known to
some as PPCoin, Peer-to-Peer Coin) was created by software developers Sunny
King (pseudonym) and Scott Nadal. Available since August 2012, it was the first
digital currency to introduce the Mintage Test to secure the network. Although
it also uses the Proof of work (using hash), since the hash difficulty
increases over time, users are rewarded with coins with the mintage because, in
the long run, this will mean that the peercoin network will consume less
Dogecoin: (DOGE), was
launched in December 2013. Created by Billy Markus and Jackson Palmer, it is
based on the Bitcoin protocol, but with modifications. It ensures having a much
shorter coin creation time than other currencies and there is no limit to the
dogecoin number that can be produced.
Primecoin: (PPC), is an
altcoin with a difference. Developed by Sunny King (who also developed
peercoin), his proof of work is based on prime numbers, which is different from
the usual system used by most virtual currencies , based on the Bitcoin
framework. It is the search for special long strings of prime numbers, which
are of great interest in mathematical research.
Bitcoin, the pioneer
Bitcoin is for many the first, and most famous digital
currency, and perhaps most people come to mind when we talk about virtual
currencies. Fame has not come alone. Perhaps one of the main reasons for its
success is the fact that it has an accounting book of all the transactions that
are carried out and that are verified from the cryptographic point of view.
This book, in addition, does not belong to a single organism or person, but is
maintained jointly by the users of the currency. The Bitcoin Foundation
organizes a large part of the activity around this currency.
Another peculiarity of Bitcoin is that it was a pioneer in
having a decentralized currency system, in which all its members are equal and
where the currency is not issued per se, but rather advanced equipment is used,
using equations based on difficult mathematics. , they issue the currency.
What is Bitcoin?
Bitcoin is the name of the first electronic money, The word “Bitcoin” is
formed in English from “bit” – the minimum unit of information and
“coin” is a coin. Following the rules of Anglo-Russian transcription
, this term should be translated into Russian as “Bitcoin . ” Such
writing uses the official site bitcoin.org , Bitcoin Wiki , Wikipedia ,TSB
RFand other resources. Until now, the widespread version of ” Bitcoin
” came from the first translation of the wallet interface based on direct
Bitcoin is the most important currently on the online market.
The celebrity of the cryptocurrency is mainly due to the ups and downs that its
value has had in recent times, reaching considerable figures, but in addition
to its record is its reliability to make it appreciated by traders and not only
. This type of currency is an alternative to traditional currencies, mainly
because it is only used online and is not controlled by central banks and
governments, but only depends on the transactions that determine its value.
Its operation takes place through a database distributed
among various computers on the network on which the various transactions are
noted, all verified and regularly updated. The network can therefore be defined
as peer-to-peer as the torrent structure. Combined with the addresses of each
person working with bitcoins, there are encrypted keys, so as to protect the
investor and record the various transactions. There is also a personal password
to protect access to the online account, called a wallet, in which the bitcoins
are kept. The technology used is called blockchain precisely because maximum
transparency allows us to keep track of transactions without jeopardizing
security. The information on the exchanges are divided into blocks and are
resolved, for the purpose of registration, with a procedure called mining. To
perform the task are people who explore the database obtaining a reward in the
form of commission, which repays the calculations made. The payment is made
partly with bitcoins and partly with traditional currencies.
Satoshi Nakamoto invented the most used Cryptocurrency in the
online market. It is not his real name, but a pseudonym because the author of
the bitcoin wanted to remain anonymous, giving his creation to the world. The
many researches made by journalists led to Craig Steven Wright, who admitted to
being the creator of Cryptocurrency. Beyond who gave the world a new product
for commercial exchanges in the digital world, what matters most is to
understand its use.
First of all, we need to rely on secure websites that allow
us to create wallets, ie virtual and protected portfolios in which to keep
electronic money. This is an account to be accessed with confidential
credentials and to be matched with an address for transactions. It works like a
“bank account”, the funds are deposited and send and receive
bitcoins. For each payment made, however, commissions must be paid and the
speed of the operation depends on the verification carried out by the miners,
those who carry out the mining. To buy Bitcoin and / or sell electronic money
you can easily refer to the many exchange present on the internet. These are
brokerage services that allow you to take advantage of digital currencies for
your investments or for exchanges, obviously for a small fee.
Cryptocurrency in life
Initially, bitcoins were in demand only among mathematicians,
cryptographers, and also people very much keen on computer and network
technologies. Then the bit comes served merely as proof that electronic money
is possible without guaranteed security. Rather, they can be called an
electronic analogue of gold – like gold, bitcoin is difficult to mine, its
quantity is limited, and the laboriousness of production increases with time.
In the autumn of 2009 1 BTC could already be bought for 0.8 cents. Since then,
the history of stock trading began, in which there were many ups and downs,
high-profile bankruptcies and successful projects. Transactions for bitcoins
were rare and episodic at first. The first and most famous was the purchase
of two pizzas for 10,000 BTC, which took
place in May 2010 (at that time the equivalent of $ 25). Since then, the
exchange rate has risen above $ 1000 and fell back to $ 150, but that’s another
the investment and trade with cryptocurrencies?
Emma Poposka, general manager of the cryptocurrency
management company BronTech , explains to the Australian edition of HuffPost
how different investment and trade are in regard to cryptocurrencies and their
great common point: that they are becoming more widespread all over the world.
“The literal meaning of investing in cryptocurrencies,
in simple terms, is to buy a certain number of cryptocurrencies and wait until
their value increases.” Trading with cryptocurrencies is similar to
trading with traditional currencies (Forex): agents trade currencies via the
Internet “, summarizes Emma Poposka.
“People are starting to become more interested, two
years ago, there were not many, but today many people have bitcoins or ether
(the cryptocurrency of Ethereum), and these people exert a force of gravity
that will cause more people to join, but all this has only just begun. ”
In other words: if you buy a cryptocurrency in the hope that
it will increase its value to obtain benefits when you sell it, you are an
investor. On the other hand, if you want to exchange cryptocurrencies (bitcoins
per ether, for example) in the hope of maintaining the highest possible value
according to market speculation (as it happens in the stock market), you are an
agent and you are trading.
What risks do you have?
According to Lucy Cameron, chief research consultant of the
Australian R & D & i group Data61 , the main risk when it comes to investing
in and trading in cryptocurrencies is the volatility of current markets.
Nor should we forget the security risks that surround digital
wallets, as well as the fact that the value of cryptocurrencies can fluctuate
enormously, with sudden spikes and drops, depending on a multitude of events on
a global scale, according to Lucy. Cameron:
“The market is highly volatile, and that’s the first
thing we have to take into account, there are a lot of risks.” In the
past, the main risk has been piracy, which has come to take control of
portfolios of users and There are usually periods of enormous volatility and
significant depreciation of a country’s currency due to important events, for
example, with the Brexit, the pound went down a lot and Bitcoin experienced a
peak. of value, “he warns.