What are cryptocurrencies?and How do cryptocurrencies work
It cannot be denied that cryptocurrencies are a major topic at the moment.Whether in the news or in conversations with friends, virtual coins attract a lot of attention.In large part, this is due to the possibility of high return on investment, which is always an expectation among those who decide to bet on them.
And when it comes to cryptocurrencies, bitcoin soon comes to mind, the pioneer and also the most famous.The unit value of bitcoin is equivalent to thousands of reais, and this incredible quote helps explain the virtual mining in search of its fragments.
But if you don’t understand how to buy or get this type of currency, be sure to read this article to the end.We will explain everything about cryptocurrencies, how this market works , investment details, advantages and risks they offer.
And let’s not stick to bitcoin, although it leads the race among the most prized cryptocurrencies. But as you will see from now on, the list of cryptocurrencies is much more extensive.
Do you want to unravel this interesting world of virtual currencies?
What are cryptocurrencies?
Cryptocurrency is a virtual currency. It is represented by a hard-to-change code that uses cryptography and blockchain technology to ensure the decentralized functioning of internet trading.
In addition, a cryptocurrency can be converted into real values and its negotiation takes place through the web, without intermediaries and without bureaucracy.
It is, in fact, a very private instrument.Its main characteristic is the absence of a regulated monetary system , which makes it circulate without submission to a financial authority.
Precisely because they are decentralized, cryptocurrencies can be transferred from one person to another without the resource going through a bank, as in the traditional system.
This is a movement called point system to the point (of the English peer to peer).
Although a lot is said today about cryptocurrencies, it cannot be said that they are a consolidated instrument.In fact, they couldn’t even be, since the first one was created in 2009 (less than ten years ago, therefore), being named bitcoin.
It is noteworthy that, essentially, cryptocurrency, virtual currency and digital currency are terms that have the same meaning.The first refers to cryptography, while the other expressions “digital” and “virtual” refer to the intangible and abstract characteristics of online currency.
How do cryptocurrencies work?
As something “digital”, cryptocurrencies do not physically exist .They are stored in a virtual wallet and can be managed via a mobile device or personal computer.
In this way, the quotation, purchase and sale take place anonymously, always over the internet.For this analysis to be more accurate, another actor must be included.
We’re talking about the blockchain, also known as the trust protocol, which is the technological innovation behind cryptocurrency.
It consists of shared databases and records whose main security measure is decentralization.It is in the blockchain that a kind of global index is created for all transactions within the same market.
It works like a ledger, fully public and shared.This absence of third-party mediation ends up creating a sense of trust in direct communication between the parties involved in the transaction.
