What is cryptocurrency?

Nowadays, the cryptocurrencies topic has become important to most people who are trying to understand what it is about, and how it works. A cryptocurrency is a digital currency that uses digital encryption on its operations, which works as a method of exchange; it can also work to make transactions and even pay for services or products. Unlike traditional currencies, this type only exists online. The transactions processes are faster having lower costs compared to traditional trading systems.

During the ’90s, there were several attempts to create a digital currency, but most did not succeed. Many attempts failed due to many inconveniences. However, in 2009, an anonymous author using the alias Satoshi Nakamoto published the Bitcoin white paper that became a model that would be helpful to create other cryptocurrencies.

Since this topic has become more relevant, it is necessary to understand many details about how it works and how to take advantage of it.

What is Blockchain?

Blockchain is a public ledger that records and stores transaction information through blocks. It uses a peer to peer system, which allows making all the crypto movements publicly visible. All transactions using this type of technology guarantee transparency. Since it is shared as a ledger the information of the transactions is available to all audiences. Despite the access to personal data of the owners of the digital wallets, it is entirely private as well.

How does it work?

Cryptocurrencies are stored and sent through a digital wallet. Users who want to make a transaction and send cryptocurrency must use their digital wallet to transfer the amount they want to send from one address to another. The transactions are recorded in a public ledger, which is called Blockchain. The information and the ledger are encrypted to guarantee security and privacy to all the users. Most blockchains work as a decentralized system, which is not controlled by the government and allows the data to be anonymous.

Benefits:

1. The transactions are more confidential: each transaction is unique. All transactions are public. However, personal data is completely private.

2. Decentralized: it is a decentralized system, which is not controlled by the government and allows the data to be anonymous.

3. Security: the information and the ledger are encrypted to guarantee security and privacy to the users.