When we are in search of knowing what a cryptocurrency is, we can notice that they are also called cryptocurrencies or cryptoactives, which is considered a digital medium for exchange. But how do we know what the exchange is about? Well, its main function is that of a coin, and that is why they are understood by that name. Similarly, it is something fully digital, which requires cryptographic methods that can ensure a financial transaction, order in the control of units that are a new creation and be aware of how asset transfers are being made.
And it is for this reason that we can consider them as decentralized alternatives to digital currencies. “Decentralized” means that these currencies are not controlled by a single administration or company. The same goes for traditional currencies that are regulated and centralized by corporations and banks, so it is the opposite of the two.
But how can you get to know the world of cryptocurrencies better? Well, you need to understand some basic concepts first. The first is that it is supported by a decentralized network of computers, which are nodes distributed throughout the world that contain copies of all the executed transactions. The second concept is that miners are the people who belong to the nodes, and when new bitcoins are produced, they have an incentive to distribute them to the people who belong to those nodes.
Another important concept is the stock market, these companies make it possible to convert currencies such as the euro or the dollar into bitcoins and access the world more easily. When you receive them, they are stored in a “wallet”, or whatever you prefer to call it, which is an application that allows you to store or redeem them.
How many cryptocurrencies are there? It depends on how they are counted. If you were attentive, you will realize that we already mentioned one of them previously. Some might be Bitcoin, altcoins, stablecoins, government tokens, NFTs…there’s a lot of overlap between the categories. One thing we can tell you with certainty is that no matter what type of investment or project you may consider, you will undoubtedly find that there are many cryptocurrencies that can help you, as is the case with the PP23 Token that guarantees that your finances will not be at risk.
At first it can be a bit overwhelming to see and hear so many names, but once you get the hang of it it all becomes much easier and more engaging. For the same reason, we would like to tell you how it all came about… Some time ago, as the population and transactions increased, the system began to have problems. The solution arose from the creation of a fiduciary currency, which would provide confidence in a promise to pay the regulator. The system was no longer based on the value of precious metals, but on the general belief that silver had value.
One type of legal tender is legal tender called fiat currency. It quickly became money because the government supported it and declared it to be a legal payment. But after Richard Nixon unilaterally abandoned the gold standard in 1971, the dollar became the de facto legal tender. The euro, yen, or conventional government currencies were legal tender.
The biggest advantage is that the value of fiat currencies can be manipulated, just like governments can devalue currencies. Currently, fiat currencies do not have fixed units that can be issued, and there is no consistent or expected pattern as to when they will be issued and how they will be distributed.
The integrity and balance of the account is maintained by a community called miners who use their computers to “mine” or create new currency units, verify transactions and their history, and add them to a public database.
Cryptocurrencies do not have government insurance like bank deposits. Which can give the idea that cryptocurrencies stored online do not offer the same protection as money deposited in a bank account. The cryptocurrency market allows for the decentralized construction of many tools and services. This is what makes the process transparent. And it is mainly due to the blockchain of transactions and smart contracts that allow the automation of financial instruments when the intervention of third parties is not required.
To make you more secure, we are going to simplify the information a bit: fully digital exchanges use strong cryptography to protect transactions and their main function is to be an electronic money system that is not owned by a single party. A good cryptocurrency is decentralized and there is no central bank or subset of users that can change the rules without consensus. Network members (nodes) run software that connects them to other members and allows them to exchange information with each other.
How could we make contact with this? Users must communicate through a central server. There is no hierarchy: the nodes are connected and pass information to each other. The decentralized nature of cryptocurrency networks makes them very resistant to disconnection or censorship. However, the instability of the main server is enough to bring down the centralized network. If the bank’s database is wiped and there are no backups, it will be very difficult to track user balances.
In the case of cryptocurrencies, nodes keep copies of their databases. In practice, each node acts as its own server. Individual nodes can be “offline”, but their peers can still receive information from other nodes.
Consequently, cryptocurrencies work 24 hours a day, every day of the year. They allow to transfer value to any part of the world without intermediaries. For this reason, they are often called illegal since anyone with an internet connection can transfer funds. Something that is very far from reality.