What is a Cryptocurrency?

Cryptocurrencies have been the talk of the world for over a decade, but how did cryptocurrencies come about? What is their origin? What is their future?

Cryptocurrencies are digital currencies, and have technological characteristics based on the use of cryptography, this will be clarified later to answer the question What is a cryptocurrency?

The first cryptocurrency is Bitcoin, created in 2009 by "Satoshi Nakamoto" and until now the identity of this person remains anonymous. This person published an article with a payment system that he called Bitcoin and after a few months he published the software that allowed the currency to be managed, and in forums he began to interact with the first interested parties.

This is how Bitcoin was born, but behind this first launch there is a long road to its creation and development. The efforts of scientists, mathematicians and people focused on the future have been able to create what it is today.

Its origins date back to the 80s and two other names come to light in this story: David Chaum and Wei Dai, the first a cryptographer and the second an engineer specialized in cryptography dedicated to the development of electronic exchange technologies or what would later be called the technology Blockchain . Both contributed to what is known today as cryptocurrencies.

Now, with this introduction of its origins, we can continue explaining what is a cryptocurrency?:

What is a cryptocurrency?

Cryptocurrencies are digital exchange assets, the same as currency, but not physically available. Cryptographic methods are used to secure transactions, control the creation of new units, and verify assets.

This means that it is a currency that cannot be copied, guaranteeing security in all aspects of the transaction, because it is made up of a series of complex codes generated by a computer that are impossible to trace.

They can be considered a decentralized alternative, which means that they do not depend on a service or company, nor are they regulated by any financial or government entity. The opposite of what happens with traditional currencies, which are centralized and organized by banking and financial systems.

Another peculiarity of this currency is that its value is variable and in recent times it has the characteristics of stock market assets. This creates a cryptocurrency market in which you can buy at a low price and then sell.

How do cryptocurrencies work?

The first feature, as we have mentioned above, is that they are based on a network of decentralized computers , or nodes distributed around the world that generate copies of the transactions carried out, but these are not traceable.

Miners are the second feature, they are responsible for distributing the generated cryptocurrencies among the nodes.

There are also exchanges , which are companies that allow you to exchange currencies such as euros, dollars, etc. for cryptocurrencies more easily. Added to this is the wallet or portfolio where they allow you to store or exchange them.

What you should know is that each cryptocurrency is unique, it has its own algorithm, and the number of units issued is managed each year, that is, Bitcoin is finite and the amount produced is reduced by two each year. It is estimated that a total of 21 million Bitcoins will be produced. This is an important difference with respect to traditional currencies , where banks modify their value.

What other cryptocurrencies exist?

Although Bitcoin was the first to appear in 2009, as we mentioned above, more and more cryptocurrencies have been added since then. Some have been presented as quite strong alternatives, such as Ethereum, Litecoin and others. And since there are many alternatives, even companies and governments have tried to create their own cryptocurrencies, but so far they have not had the expected success, as was the case with Facebook, Paypal or Telegram.

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What is the future of cryptocurrencies?

Cryptocurrencies have been a topic of discussion and controversy, for some it is the future and for others a necessary evil. There are many questions, from their fluctuation in the short and medium term, the possibility of them replacing physical currencies and until now we have more questions than answers.

What we do know is that at the moment they are unpredictable, which is why their future is uncertain, and this is partly due to the misinformation surrounding this topic. But what cannot be denied is that cryptocurrencies have become popular and gained credibility.

This makes it clear that we need to pay more attention and do more research, and for this reason we invite you to read more about the topic of how to buy bitcoin.

The truth is that many financial institutions and world governments are betting on the purchase of these crypto assets and together with the debate in the United States regarding regulation, this makes it clear to us that it is worth taking this whole cryptocurrency issue seriously.

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