Understand how cryptocurrencies work
Understand how cryptocurrencies work – Despite being appreciated by many as the future for showing agility and confidence, the cryptocurrency, although it is very questioned
Cryptocurrencies exist since 2009 when Bitcoin was generated by the pseudonym Satoshi Nakamoto , but although they generate many doubts. For having an innovative character, the market suffers from suspicions of those who do not understand how cryptocurrencies work.
However, it is essential to keep an eye on this market. Large financial entities, such as the IMF and the World Bank, are beginning to give more dedication to cryptocurrencies by admitting that they may be the future. This is explained by the lack of bureaucracy and stability given by the blockchain process, where transactions with virtual currencies are carried out.
Blockchain in practice
The trading of all cryptocurrencies – Bitcoin , Ethereum , Ripple , Litecoin , etc. – takes place over the internet, on blockchain networks. Networks are a translucent process that accounts for all transactions carried out and guarantees anonymity since users are not identified by data, but with codes that represent the wallet’s address.
During the transaction, the data is grouped into blocks that have their authenticity called a hash. Each block carries its authenticity added to that of the preceding block and are linked to each other. Thus, in order to change any information it would be essential to smash the encryption of the block in question, the antecedent and so on.
This complex data technology behind the blockchain is what ensures the stability of transactions. The director general of the International Monetary Fund (IMF), Christine Lagarde , commented that this network is a process of solid storage of records and guarantees the rights of particularity. “This could help financial markets to work more efficiently,” he said.
The uses of cryptocurrencies
With the Bitcoin peak in 2014, thanks to its historical increase of approximately 1900%, more people started to notice the presence of cryptocurrencies. The inference of this was an absolute interest in that market. Currently, cryptocurrencies are generally used, especially, for four purposes: investors who understand how cryptocurrencies work and bet on quick valuations and devaluations to acquire and trade profitably; people who need to remit international currency and do not want to tolerate bureaucracy or high bank fees; people who want to make a purchase on a specific website that accepts virtual currencies; or those who buy to the public because they trust that the cryptocurrency will be worth a lot in the future.