In principle, as its name indicates, cryptocurrencies are developed in the digital world and used mainly in the global digital economy, which has advanced so much in the last months of the pandemic. They are also known as cryptocurrencies or crypto assets.
Crypto is because this digital money is exchanged through the use of crypto. It is encrypted, so each digital operation is more secure than a traditional one.
Each transaction is a file in a database, which has public keys of the sender and recipient and the number of coins transferred.
Once users confirm the transaction, the so-called “miners” are the only ones who mark them as legitimate by solving a cryptographic puzzle. Then each node on the network adds it to its database.
The database that supports it is not a reserve kept in a single and physical place but can be downloaded by users.
That is why each change must be registered. Otherwise, it has no basis. The latter means that all purchase-sale or exchange operations are registered, traceable, and have a receipt.
Cryptocurrencies are bought, sold, or exchanged on “exchanges” or exchanges and can also be “mined,” a process that we will explain later in this article.
But it is necessary to clarify that all the physical representations that we see of cryptocurrencies or Bitcoin, whether in a photograph, a video, or in a small object similar to a coin, have no real value. They are just a graphical representation of an asset that is 100% digital.
The big difference between traditional currencies and cryptocurrencies is that they are decentralized. They are not regulated by any nation or Central Bank but are sustained by the value and consensus achieved by their users.
This, compared to traditional currencies issued by a national authority, makes them a little more independent of economic crises or inflation suffered by a particular country.
In this decentralized financial ecosystem, no entity dictates the rules, but cryptocurrency users can make, for example, Bitcoin Improvement Proposal (BIP), that is, suggestions to improve the protocol, in this case of Bitcoin. When consensus is reached around a proposal, it begins to be applied to the cryptocurrency in question.
Another big difference is that cryptocurrencies are not governed by any particular monetary policy being a decentralized currency. Bitcoin, for example, is a cryptocurrency of which it is known since its foundation that there will be a total of 21,000,000 and is not derived from the issuance made by any country.
These cryptocurrencies are registered in an extensive shared and fully traceable database called “blockchain” or “chain of blocks,” another of the significant differences with the traditional currency.
Now that you know what cryptocurrencies are, it is also necessary to explain that the Argentine Chamber of Electronic Commerce (CACE) recently clarified the differences between cryptocurrencies, virtual currency, and digital money.
Digital money refers to any means of monetary exchange through cyberspace. For example, if you make an electronic transfer from one bank or another, you use digital money. In other words, digital money is real money but expressed on the web.
Today, for example, you are using digital money when you pay at a store. Your credit card is an old form of digital money. It is based solely on the abstract value of a currency, even when it is based on authentic ranges of the economy.
On the other hand, virtual currency is not real money expressed on the web but only has exchange value within its digital context. Perhaps, the best example is the virtual currencies used under specific terms of trade in video games.
Ripple (XRP), for many experts, is the successor to Bitcoin since the former developers of Bitcoin created this digital currency to improve performance.
Ripple’s primary goal is to connect banks, payment providers, and digital asset exchanges, enabling faster and more profitable global payments.
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Like Bitcoin, Ripple is a secure system and encrypted whose transaction information is public, but payment information is not. In other words, it is a privileged system where the sender and receiver are the only ones who have the information and the code that decrypts it.
The ten cryptocurrencies (or cryptocurrencies) with the most future
Dogecoin is one of the most mediated cryptocurrencies or cryptocurrencies of all time. You have probably seen in multiple media and great celebrities promoting this cryptocurrency that was initially created as a simple meme.
This coin was born as an internet joke that was based on a meme. The Doge meme is simply an image of a Shiba Inu, a breed of dog, often accompanied by different grammatically wrong phrases that make fun of a situation.
Following the widespread success of the meme, Billy Markus decided to create an alternative currency to Bitcoin based on Litecoin because he knew that Bitcoin at that time was closely related to the remuneration of criminal activities on the Internet.
The operation of Doge is based on Litecoin and works similarly to other cryptocurrencies in which miners have to perform mathematical tests to approve a block of the chain.
The reason for its popularity has been the consequence of different celebrities having “pumped up” (artificially raised) its price through a repeated mention on social networks claiming that it is the people’s currency.
The ten cryptocurrencies (or cryptocurrencies) with the most future – uses
USDC is another example of Stablecoin, as we mentioned earlier in the case of Tether. In this case, the companies behind the USDC are Circle and Coinbase, making it a solidly backed currency with a higher level of transparency than its competitors.
USDCoin is a response to the need to have stable coins as bridges between the world of government money (EUR, USD, MXN, …) and the world of cryptocurrencies and a response to the mismanagement of Tether as the only stable cryptocurrency.
Tether had to ensure that for each issued token (USDT), there was 1 USD in its safe to support it, but successive audits showed that they did not have that support. They also presented accessibility problems since you had to meet capital criteria that many would characterize as abusive to access the purchase of these tokens.
In this context, Coinbase and Circle saw the need to serve the market with a much more secure and supported token and decided to create a Center. Center is the company in charge of managing the USDC.
The USDC token is an ERC-20 token that works on the Ethereum network, which adds a series of advantages over Tether, such as integrating with other decentralized applications that run on Ethereum and with other crypto assets exchange houses.