Cryptocurrencies are a term that we have all heard or read on occasion, either on social networks or going out.
When we talk about cryptocurrencies or virtual currencies, we refer to the money that only exists in the digital environment. But, its implementation as a bargaining chip, between companies or institutions, is increasing without stopping.
There are currencies like Bitcoin that attract attention for being a pioneer and reaching very high prices. But in addition, there are others, known as Altcoins, or alternative currencies.
Among them, we can highlight the famous Dogecoin, which was born as a meme, or casual currency. Since its appearance, it has been creating a strong community, formed by the Shibes, who have promoted various acts of solidarity, and who intend to bring “Doge to the Moon”
To the moon: an upward movement that keeps prices on the rise.
But what really are cryptocurrencies, what is Bitcoin, what is Ethereum, how do they work and where do they come from … In this post we are going to talk about the appearance of cryptocurrencies, and how they work, since, to be able to enter a market, we must first know it.
Cryptocurrencies What are they?
Cryptocurrency refers to digital money, also known as a cryptocurrency or virtual currency. The cryptocurrency, although they fulfill the function of a currency, does not take place in physical space, but rather responds to an exchange of value in the digital environment.
The virtual or crypto active currency works as a payment method without the need for the supervision of a third party that mediates in the operation, and they use cryptographic encryption to secure and verify transactions, as well as to control the creation of new units, preventing copies from being reproduced.
The value of cryptocurrencies is variable, their value changes depending on demand and supply, in addition to the commitment of users. For this reason, as with stock market assets, there is high speculation in its environment.
When cryptocurrencies appear
Cryptocurrencies have a curious history in their appearance, since the first virtual currency, Bitcoin was born at the hands of “Satoshi Nakamoto”, a pseudonym that corresponds to a person, or group of people, who remain unknown.
In 2009, Satoshi published an article describing the new Peer2Peer (P2P) payment system that he named Bitcoin. After a few months, it published the first version of the software that allows managing the currency’s network, interacting with stakeholders through forums.
P2P: Peer to Peer
To this day, being one of the 20 richest people on the planet, his identity is still unknown.
But we do know that, following the appearance of Bitcoin, the pioneer cryptocurrency. New crypto assets called “Altcoins“ have been arriving, increasing their value exponentially, and are being used in an increasing number of transactions.
Altcoins: Alternative currencies to Bitcoin, the pioneering cryptocurrency.
How cryptocurrencies work
Cryptocurrencies are the payment method in a decentralized network of computers, known as Blockchain or chain of cubes, made up of nodes spread throughout the world. Cryptocurrencies or cryptocurrencies are being used more frequently to make transfers since they move in a safe and fast system.
The nodes are computers. The people who are part of the nodes, or control them, are known as miners.
The miners try to generate cubes for the Blockchain chain. When a miner or group of miners generates a cube, new tokens or cryptocurrencies are born that are distributed among the people who created the node.
The Bitcoin or altcoins, for the user on foot, are obtained through the Exchanges.
The exchanges are foreign exchange companies, and allow you to change dollars, euros or other fiat currencies by Criptomonedas. When you make a change and buy cryptocurrencies, you can use them in applications known as “Wallets” or wallets, which allow you to exchange or save them.
Wallets
Wallets are wallets that allow you to exchange or save cryptocurrencies. We must also highlight the different portfolios or types of Wallets.
If the purse or wallet is connected to the internet, it is known as a wallet or hot wallet. Within the portfolios with connection to the network we can highlight; web wallets, mobile wallets, or desktop wallets.
A wallet without an internet connection is known as a cold wallet. It may be an electronic device prepared to store crypto assets.
Cryptocurrencies have a measured production, unlike banks or fiat money. In other words, quantities cannot be produced freely, which means that they have a greater capacity to generate value compared to conventional money. And because the logarithm varies between cryptocurrencies, the amounts that can be produced are also different between the cryptocurrencies themselves.
Some important cryptocurrencies
Since the birth of Bitcoin, multiple cryptocurrencies have come to light. Each one with different characteristics although they all share the same operation.
Some of the virtual currencies that we can highlight are:
Bitcoin (BTC)
Bitcoin is the pioneering virtual currency and the one with the highest value. It was created in 2009 by an unknown person to this day. Its valuation has suffered numerous ups and downs, although it is still the leading cryptocurrency in the cryptocurrency market.
Ethereum (ETH)
Ethereum is not a cryptocurrency itself, but a blockchain platform. That is, the chain of cubes formed by computers that function as one and allow applications to be executed within this network that is powered by ether.
Ether is the cryptocurrency of Ethereum. And the featured token is ERC-20 token
The tokens are digital assets , or units of value used to exchanges within a Blockchain chain. The main difference between tokens and cryptocurrencies is that cryptocurrencies use their own blockchain, while tokens need the blockchain of a cryptocurrency to function.
Dogecoin (DOGE)
Dogecoin is famous on social media, and above all it hosts a large community. The Doge community, made up of the Shibes, has already consolidated several acts of solidarity and intends to take the coin to continuous all-time highs.
The doge or dogecoin is a virtual currency derived from Litecoin. Use a Shiba Inu dog as a pet or image. The creators of this cryptocurrency considered that it could be a fun and cheerful coin, providing it with a larger audience than that of Bitcoin.
Cardano (ADA)
Cardano is a smart contract platform similar to Ethereum. It focuses on increasing security through a layered architecture, and calls itself “Third Generation Blockchain.” Cardano is the first of its kind created from scientific philosophy and built on peer-reviewed academic research.
The cryptocurrency used within the Cardano system is ADA, and the transaction fees vary and are determined by the following equation:
Transfer rate = a + b * size.
- a = a constant currently equal to 0.155381 ADA
- b = a constant that currently equals 0.000043946 ADA / byte
- size = size of the transaction in bytes
Ripple (XRP)
Ripple is for many the great successor to Bitcoin, and was created by the same developers to improve the performance of the leading cryptocurrency. Its cryptocurrency or token is XRP.
Ripple is a secure method that stands out for its speed in transactions. But unlike other cryptocurrencies, it is reprehensible payment just like common fiat currency. The censorship of payment, account freezing, or the cancellation of a transaction, can occur because most of the nodes are governed by the creating company.
Tether (USDT)
Tether was created as a bridge between common money and cryptocurrencies. What causes them to be backed by an equivalent amount of dollars, euros or yen. For this reason, we know it as a stable currency or stablecoin. This also avoids volatility.
This coin is surrounded by controversy and is the subject of much criticism by various users. However, this does not prevent it from being among the 20 most important cryptocurrencies in the world, and being the leader among stablecoins.
Litecoin (LTC)
Designed as an improvement of Bitcoin, it replicates the technology of the leading cryptocurrency, being faster in payments while maintaining a cost of 0. This virtual currency has the characteristic of having greater liquidity and is easier to convert than other cryptocurrencies.
Dash
Dash outperforms Bitcoin in cost reduction and transaction time. It was previously known as Xcoin or Darkcoin, and it was the first two-tier virtual currency constituted by miners and Masternodes. The latter is a type of nodes created to perform specific tasks or services on the Blockchain network.
Dash has a combination of cryptocurrencies and processes, which makes the tracking of transactions almost impossible, increasing user privacy. In addition, this cryptocurrency intends to penetrate the market for payments in shops to acquire goods, as a common currency for transactions.
Constellation (DAG)
Constellation (DAG) has this name because it is made up of a group of digital entities that govern different aspects of the platform. Constellation defines itself as a distributed decentralized blockchain or blockchain powered by a microservices approach, and its smart contracts are not set up on the Ethereum blockchain as it normally is.
Safemoon
Safemoon is a decentralized finance token (DeFi). This means that it is part of an alternative financial system that allows trading in blocks of chains or blockchain without the intervention of centralized systems.
The difference between this cryptocurrency and other cryptocurrencies is that the creators of safemoon encourage their investors to keep their tokens and not sell them.
Safemoon was among the first cryptocurrencies on the Binance Smart Chain to gain widespread attention. Most of this attention came through social platforms, especially Twitter and Tik Tok. It was also one of the first cryptocurrencies to implement redistribution tokenomics, something that has yet to be proven as a viable framework for cryptocurrencies.
What do you think?
Since the birth of Bitcoin, virtual currencies have been making people talk and are making networks burn, both for their value and for their usefulness. Cryptocurrencies cover a world of opportunities with very interesting functionalities, and without a doubt, they will reach a development that will integrate them to a greater extent within society.
It can be the currency of the future for any type of transaction, so knowing them will be very useful.
From now on, we are going to keep you informed about the world of cryptocurrencies. Thus, you will be able to handle the information with knowledge, and knowing how to move your investments within the virtual currency market.
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