5 Terms Needed to Understand How Cryptocurrencies Work

Experto - MegaAcademy
Experto - MegaAcademy

In an increasingly interconnected world characterized by speed and immediacy, the digital realm becomes ubiquitous. And this includes from the way we communicate to money, being protagonists of the latter cryptocurrencies.

This asset widely used worldwide and accepted as a form of payment, has its own rules that are important to understand. Sure, at first it may seem a bit complicated but if you really want to be part of an advanced financial system and closer to the future, you should start by knowing its basics.

Some essential questions you can ask yourself to enter this world would be: Do you know how cryptocurrencies work? Do you clearly understand all the terms like trading, blockchain or wallet? This and more will be answered below, so go ahead!

Let's talk about Cryptocurrencies

Cryptocurrencies already have an old date, it is a modern, effective, reliable, secure and encrypted system with which you can access products and services.

Today there are more than 7000 crypto assets on the market to invest, with high capitalization rates But before this electronic boom, there were many failed efforts in the 90s to manufacture a virtual currency.

Until the most popular and famous cryptocurrency appeared, Bitcoin, whose operation began in early 2009 and since its creation, an emission limit of 21 million Bitcoins was established

This asset designed by a developer under the pseudonym "Satoshi Nakamoto", has total decentralization. That is, it is not managed by servers or controlled by any central entity.

After the rise of Bitcoin by 2013, many other cryptocurrencies were created and exchanged through virtual transactions, capturing the attention of users.

Whatever your choice of cryptocurrency, it's critical to know the basics before jumping into the market. Here you can understand the various definitions and the reason for their importance. Read.

Why should you know the terminology?

How does a cryptocurrency work? Do mining and blockchain mean the same thing? If you do not fully know the differences between each term you could risk wasting your money,time and effort.

Es fundamental que conozcas la terminología dentro del entorno de las criptomonedas, para adentrarte en este mundo  de manera segura y efectiva. Click To Tweet

Knowledge is power, so get ready to discover a whole financial, digital and profitable world.

1: Cryptocurrencies

"Cryptocurrency" is composed of two keywords, the first "crypto", which evidences a cryptographic system to provide maximum security. The second is "currency"," the medium loaded with face value for its commercial purpose.

What are cryptocurrencies

They are also called cryptocurrencies, cryptocurrencies or crypto assets. Thus, a cryptocurrency is nothing more than digital money,translated into data and ready to make transactions

What are the main cryptocurrencies on the market today?

Bitcoin (BTC)

Ethereum (ETH)

Litecoin (LTC)

DAI (DAI)

Ripple (XRP)

Tether (USDT)

Monero (XMR)

There are many other cryptocurrencies on the market, but these are the most used and most liquid.

All of them can be exchanged within a peer to peer (P2P) market. P2P stands for peer to peer. This is the exchange of data between two or more users.

2. Mining

In this complex electronic system, it is essential to verify or validate the transactions made every second. This is where the mining process comes in, which basically consists of verifying encrypted transactions.

In this sense, miners represent an important part of the network. They process information using powerful computers that solve puzzles and maintain a distributed public chain or ledger of records.

3. Blockchain

The blockchain is a distributed database where all cryptocurrency transactions are recorded. After being verified and validated, these transactions are settled in a kind of account book or blocks.

Todas tus transacciones de criptomonedas serán registradas en la Blockchain, donde nunca podrán perderse, modificarse o eliminarse. Click To Tweet

This distributed data is stored on computers around the world called "nodes." On each node, the versions of the transaction, as well as the previous transaction, are checked to avoid attempts to alter the ledger (virtual record).

In this chain each node or block has information from the previous node so it has an essential and immovable role in it, making it almost impossible for it to be violated.

Blockchain is the technology behind cryptocurrencies, which provides total security and protection against fraud.

4. Wallet

You wouldn't be able to store your cryptocurrencies under the mattress or in a safe. So where to store them? Simple, in a wallet or virtual wallet that you can manage as you wish.

Store cryptocurrencies

There are 2 types of wallets, hot wallets that are connected to the internet and cold wallets that are not. You can choose between one and the other according to your specific needs. Hot wallets are widely used to carry out day-to-day transactions online, while cold wallets are recommended for savings, as they offer greater security against computer hacks.

How do they work? Basically, you will be able to access and manage your cryptocurrencies using a public and a private key

  • Private Key: This is a password or secret PIN to gain full control over your funds.
  • Public Key: It serves as a bank account number, which you can share with the one who sends you money without risk of being scammed.

5. Cryptocurrency Cashier

Cryptocurrency ATMs or ATMs are becoming more and more popular. There are currently over 11400 cryptocurrency ATMs in 71 countries, it will all depend on factors like your region or cryptocurrency used.

There are also alternatives such as the exchange of cryptocurrencies for gift cards or exchanges for fiat money, in addition to trading.

Conclusions

The very advanced and growing environment of cryptocurrencies may seem complicated, but it really is the face of the financial future. By knowing the terminology, its use and functionality you will be able to manage any crypto asset.

This virtual system is on the rise and is widely used throughout the world. If you like immediacy in your transactions, but with maximum security and reliability, it's time to take action.

You will be able to make payments, send remittances, buy products, save, make comfortable withdrawals and trade successfully in an environment that allows you to invest safely Do you have doubts and require professional advice? Count on us, CCOINS,a true cryptocurrency expert who will give you the tools to take advantage of all the advantages that cryptocurrencies offer. We have the experience, commitment and an ideal platform for you to carry out crypto operations yourself easily and with total security.