What are cryptocurrencies and how do they work?

Cryptocurrencies have revolutionized the financial world by offering a decentralized system based on blockchain technology.

Without physical backing or state regulation, these digital currencies are used as an alternative means of payment and as an investment option.

Cryptocurrencies are virtual currencies that have no physical equivalent and use cryptography to secure transactions and control the creation of new monetary units.

Unlike traditional currencies, they are not controlled or backed by any central authority, making them decentralized assets.

Furthermore, cryptocurrencies can be used both as an alternative means of payment to legal tender and for investments.

Cryptocurrencies operate through a decentralized database known as a blockchain. This technology allows transactions to be recorded securely, transparently, and unalterably, without the need for intermediaries. Each transaction is validated by a network of participants, who confirm the transaction and add it to a block. This block is linked to the previous one, thus creating a chronological chain of transactions.

Due to this decentralized structure, cryptocurrencies are used not only as a digital means of payment but also as a financial asset for investment. However, unlike other financial assets, they are not regulated by any government entity and do not have consumer protection mechanisms.

Currently, it is estimated that there are more than 9,000 cryptocurrencies on the market. Among the most popular are Bitcoin, Ethereum, Tether, and Ripple. Each has its own characteristics and uses. For example, Bitcoin is considered the first cryptocurrency and the best known for its high market capitalization, while Tether is backed by traditional assets to maintain a stable value.

Bitcoin was launched in 2009 and is considered the world's first cryptocurrency. Its creator, under the pseudonym Satoshi Nakamoto, designed a system based on blockchain technology that allows for decentralized transactions. Currently, Bitcoin is trading at around $23,000 on exchange platforms and is used both as a means of payment and as an investment instrument.

Blockchain is a technology that organizes information into blocks, which are linked and validated by all network participants. This technology is fundamental to the functioning of cryptocurrencies, as it guarantees the security and integrity of transactions . Each block contains a record of verified transactions and a link to the previous block, creating an immutable record.

Decentralization is one of the key features of blockchain, meaning there is no central entity controlling the network. This structure has enabled the growth of cryptocurrencies by eliminating the need for intermediaries.

Cryptocurrency mining is the process by which new units of currency are created. This process involves using powerful computing equipment to solve complex mathematical problems. Miners who successfully solve these problems receive a reward in the form of new cryptocurrencies. This activity is essential for maintaining the functioning of the network and validating transactions.

A virtual wallet, or virtual wallet, is a software or physical device that allows you to store, send, and receive cryptocurrency. Wallets come in several types:

The price of cryptocurrencies is determined by supply and demand in exchange markets. Unlike traditional currencies, there is no central bank that sets the price of cryptocurrencies. Changes in demand, regulatory announcements, and economic events can all influence their price.

There are multiple online platforms that allow you to check the real-time value of cryptocurrencies. These platforms display charts showing price trends over different time periods and allow for comparisons between different cryptocurrencies. Additionally, search engines like Google offer information modules that show the current price and its most recent change.