What is cryptocurrency and what is it for?

What is cryptocurrency

Have you ever wondered what is cryptocurrency? It is a digital or virtual currency designed to function as a medium of exchange.

It uses crypto to secure and verify the infection, as well as to control the creation of new units of a particular cryptocurrency.. Essentially, they are limited entries in a database that no one can change unless specific conditions are met.

History

During the technological boom of the 90s, many tried to create a digital currency with systems like Flooz, Beenz and DigiCash that emerged on the market, but failed. The reasons were different: fraud, financial problems and even confrontations between company workers and their bosses. Notably, all of those systems were based on trust, so other companies were tasked with verifying and facilitating transactions. Due to business mistakes, creating an effective digital system was long considered a lost cause.

Then, in early 2009, an anonymous programmer with the alias  Satoshi Nakamoto introduced Bitcoin. The system is completely decentralized, which means that there are no servers involved and no central supervisory authority. The concept closely resembles peer-to-peer file-sharing networks. The traditional solution was for a central server, which kept records of balances and transactions. However, this method always carried an authority basically in control of your funds and with all your personal data at hand.

Cryptocurrencies can be exchanged like any other traditional exchange method. However, they are outside the regulations of governments and financial institutions. There are many cryptocurrency numbers in the different presentations and applications. The best known in the market are  bitcoin , ether, bitcoin cash, ripple and dash.

So a currency is a raw material?

Cryptocurrencies were created as a conventional payment method. Any type of business or shopping centers accept cryptocurrencies as a means of payment. Today they are a payment method that resembles raw materials like gold.

Who are the cryptocurrency miners?

They are people or companies that generate Bitcoin through which transactions are verified and new units are offered. Your plan is to collect the latest block transactions (verified transaction sets); process and certify transactions; They maintain security on the network by making operations participants synchronize. They benefit from a small commission which makes transactions very cheap.

Important:

  • Its value is not linked to the state of an economy.
  • The interest rate and increase in monetary reserves do not have a direct effect on their value.
  • Its value only depends on the commitment of the users to maintain its price. This means that for now they are treated as a raw material since their investment comes from speculation about the increases and decreases in value.
  • They represent a part of the variety of applications that block technology uses. A Blockchain is a tool where you can create different models of programs that include identity management, security software, and transaction processing.

Cryptocurrency Benefits

  1. Currently there are more than fifty types of cryptocurrencies or cryptocurrencies that exceed one million dollars of capitalization. Among them they are very similar and are usually derived from the first, Bitcoin.
  2. Globally they are local currencies less susceptible to the economy. Everyone can have them and transfer them from anywhere in the world and to anyone.
  3. Occasionally they experience price movements suddenly, causing them to become a problem from time to time, but at the same time generating trading opportunities.
  4. They are decentralized, they can be anywhere in the world, all day, every day. There is no specific market.
  5. The transactions are recorded in a shared book, where the recipient only receives the information they need from the issuer, reserving some data from the issuer.
  6. Bitcoins or cryptocurrency transactions hide the user's identity, which is not revealed except in some purchase or transaction for some special reason.
  7. Transparency is promoted. The accounting book can be accessed freely.
  8. Your transactions are secure, cannot be changed, can only be refunded by the recipient. In addition, Bitcoin detects writing errors in case of any problem to do the operation.
  9. The operations are subject and exempt from VAT.
  10. Miners are subject to personal income tax or corporation tax. The exchange houses for their activity of selling and buying bitcoins for euros have been subject to taxes since 2015.
  11. Facilitates international transactions. Electronic payments can be made with the same virtual currency.

Cryptocurrency Risks:

  1. Volatility is one of the risks that the cryptocurrency runs because the great fluctuations in prices can bring losses of thousands of dollars overnight.
  2. Despite the value attached to it despite its popularity, there is still uncertainty about its future.
  3. There is no way to protect person failure, technical failure, or fraud. In other words, there is no system in place to compensate for losses.
  4. For now, cryptocurrencies are free of the burden of regulation, but if they start to regulate, many traditional currencies could be affected.

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