Accelerated digitization is one of the main milestones at this time and with it the appearance of new forms of commerce, study, work and coexistence. In this sense, cryptocurrencies, also called crypto assets, have been promoted as a digital means of exchange, representing a solution to these new challenges given by the pandemic and economic crisis.
One of the trends in the economic world driven by this digitization suggests a transition to a crypto-oriented economy. Although one of the challenges is overcoming people’s skepticism, keep in mind that the entire crypto society has the potential to change the way people save, buy and sell.
What are cryptocurrencies and how do they work?
Cryptocurrencies, as mentioned before, are a digital medium of exchange. For this reason, they fulfill the function of a currency, but unlike the traditional, the cryptocurrency is totally digital. It uses cryptographic methods to secure its financial transactions, control the creation of new units, and verify the transfer of assets.
The first registered cryptocurrency was Bitcoin, which arose from the idea of Satoshi Nakamoto, who together with other collaborators published an article in 2009 in which he described a P2P payment system that he called Bitcoin.
Bitcoin and its technology have had an important impact over the years, becoming a reference on a world scale. This has allowed the appearance of new cryptocurrencies whose value has been increasing, in some cases, and not in others. Since then, a large number of different cryptocurrencies have emerged.
Some of them have been positioning themselves as solid and popular alternatives for years, such as Ethereum and Litecoin. On the other hand, there are others that have had a surprising rebound such as Dogecoin, a cryptocurrency created from a meme. Many more are on the list.
Some characteristics of cryptocurrencies
One of the important points to consider to understand cryptocurrencies is that their value is variable, just as it happens with other currencies.
Another unique feature of cryptocurrencies is that they operate thanks to a technology that guarantees their absolute protection, known as blockchain. It is a closed structure made up of computers that, due to their constant surveillance and registration, facilitate the secure transaction of digital assets without the need for an intermediary, contrary to what happens in the case of traditional money, using highly traceable technology. This allows to identify operations and avoid fraud.
Another important aspect to understand how it works is that each cryptocurrency has its own algorithm that manages the number of new units that are issued each year. As the algorithms of different cryptocurrencies vary, the maximum units of each cryptocurrency also differ, which can affect their value and performance.