In recent years we are sure that you hear the term cryptocurrencies quite often in your daily life. What are cryptocurrencies and how do they work after all? In this short article you will discover information and details about the famous cryptocurrencies that you probably did not know until today.
We start from the not-so-distant 2008 when the Japanese Satoshi Nakamoto (probably a pseudonym) created the first cryptocurrency, the famous Bitcoin. With the advent of Bitcoin, the history of money was to change forever. Although the creation of many hundreds of new cryptocurrencies has followed since (and of course continues), none have yet managed to overcome the glamor of Bitcoin. Cryptocurrencies as a modern form of alternative money do not look like ordinary currencies. They do not have a physical substance to be able to put them in a wallet and are not made available by a central bank, which defines their value, as we said in a previous article that it is done with “typical” money.
In contrast, cryptocurrency is a well-encrypted file that acts as an alternative means of trading. It is based on the principles of cryptography, a method that does not allow other people to access information. A characteristic feature of this modern type of money is that each cryptocurrency is an encrypted file that is stored in a digital “wallet” through which its respective transactions are made. This wallet can be accessed through any device connected to the internet using the appropriate security codes. Cryptocurrencies can be instantly converted into standard money, depending on their market value, in specialized digital exchanges.
Finally, something you may not have known is that the process of building new cryptocurrencies is called “mining” and is a particularly demanding process in time and energy resources.