What are cryptocurrencies?
Cryptocurrency is a digital asset that uses cryptographic encryption to guarantee ownership and ensure the integrity of transactions and to control the creation of additional units, that is, to prevent someone from making copies, as we do with a photo, for example. These coins do not exist in physical form: they are stored in a digital wallet.
A cryptocurrency is a digital asset that uses cryptographic encryption to guarantee its ownership and ensure the integrity of transactions, and control the creation of additional units, i.e. prevent someone from making copies as we would do, for example, with a photo.
How do cryptocurrencies work?
Cryptocurrencies have various distinguishing characteristics compared to traditional systems: They are not regulated or controlled by any institution and require no intermediaries for transactions. a decentralized database, blockchain or shared account. To control these transactions, they use
By law, cryptocurrencies are not considered a means of payment, they are not backed by a central bank or other government agencies, and they are not subject to customer protection mechanisms such as the Deposit Guarantee Fund or the Deposit Guarantee Fund.
Regarding the operation of these digital currencies, it is very important to remember that once a cryptocurrency transaction has been executed, that is, once a digital asset has been bought or sold, it is impossible to undo the transaction because the blockchain is a record. that it does not allow you to delete data. To “undo” a transaction, the opposite must be done.
Since these coins are not physically available, you will have to resort to a cryptocurrency digital wallet service, which is not regulated to hold them.
How many types of digital wallets are there?
is actually a Digital Wallet or Wallet is a software or application in which you can store, send and receive cryptocurrencies. The truth is that unlike a wallet with physical money, what is really stored in digital wallets or purses are keys that give us ownership and rights to cryptocurrencies and allow us to work with them. In other words, knowing the keys is enough to be able to transfer cryptocurrencies, and losing or stealing the keys could mean losing the cryptocurrencies without the ability to recover them.
Wallets come in two varieties: hot and cold. The difference between them is that the former are connected to the Internet, while the latter are not. Thus, in hot wallets we find web wallets, mobile wallets, and desktop wallets, the latter only if the computer is connected to the Internet. In contrast, cold wallets have hardware wallets and paper wallets, which simply print a private key on paper.
How is the value of cryptocurrency determined?
The value of cryptocurrencies varies depending on supply, demand, and user commitment. This value is formed in the absence of effective mechanisms to prevent its manipulation, such as those present in regulated securities markets. In many cases, prices are also formed without public information to support them. We recommend that you read this statement by the Bank of Spain and the National Securities Market Commission (CNMV) on the risks of buying cryptocurrencies.
Cryptocurrencies use blockchain
Cryptocurrencies work through a common registry or blockchain . This technology provides them with a high security system capable of preventing, for example, the re-transfer of the same digital asset or its counterfeiting. Blockchain technology works like a big book in which a huge amount of information can be recorded and stored. They are all accessible online and protected in such a way that all the data they contain cannot be altered or deleted.
What does it mean to mine cryptocurrencies?
This concept refers to the process required to verify the transactions made with this type of digital asset. For example, if we take the practical case of the bitcoin currency: its mining would be based on the verification and registration of transactions in the blockchain registry.
In short, mining cryptocurrencies means successfully solving arising mathematical problems. Miners who have performed it receive cryptocurrencies in return.
What other cryptocurrencies are out there
As we told you earlier, Bitcoin began taking its first steps in 2009. Since then, more and more new cryptocurrencies have appeared over time . Some of them have been positioning themselves as reliable and popular alternatives for years, like Ethereum, Litecoin and the like. Ethereum even has a new version called Ethereum 2 .
But there are also new surprises like Dogecoin , a cryptocurrency created for fun and based on memes . But since Elon Musk talked about it, assuring that it is the cryptocurrency of the people, its value has not stopped growing.
And as things stand, there are many alternatives with growing values , and new ones are emerging. Some names of their own are among the most valuable: Binance Coin, XRP, Cardano, Tether, Polkador, Uniswap, Chainlink or Bitcoin Cash. However, the value of most of them is very far from the value of the big three, which are Bitcoin, Etherium and Etherium 2.
What is the business of cryptocurrency?
Cryptocurrencies can be transferred to anyone over the Internet without the need for an intermediary such as a bank. They can also be used for payment. Some people buy them as an investment, hoping they will rise in value.