What are cryptocurrencies?
To begin with, you should know that cryptocurrencies - also known as bitcoins - are an intangible and decentralized means of payment alternative to traditional money. That is, through these virtual coins we can carry out operations using digital encryption, which provides security, without the need for intermediaries.
"Cryptocurrencies, especially Bitcoin, are exciting because they demonstrate how cheap it can be to move value anywhere in the world. Bitcoin is better than traditional currencies in that you don't have to be physically in the same place and, of course, for large transactions, traditional currencies can be quite inconvenient." Bill Gates, co-founder of Microsoft. How do cryptocurrencies differ from traditional currencies?
Cryptocurrencies do not materialize in paper or credit cards. In this case, the money is found in virtual wallets protected by a blockchain, or database, known as Blockchain. In these wallets, also called wallets, all operations carried out by anyone who has a cryptocurrency are recorded.
What are cryptocurrencies used for?
Cryptocurrencies are still currencies, but digital. This means they have the same use as any other physical currency. Thus, we can make payments between people. In fact, companies like Microsoft, Destinia, WordPress, among many others, already allow purchases with bitcoins or other cryptocurrencies on their websites.
Advantages and disadvantages of cryptocurrencies
To delve deeper into this new way of managing money, it is interesting to know what its benefits are, as well as its risks.
In this sense, we must point out that cryptocurrencies are characterized by being volatile. An element that lies between an advantage and a disadvantage, as the user can double their earnings from one day to the next, but can also lose them quickly.
Advantages
They are global currencies
These virtual coins are not regulated by any type of governmental organization, such as the State, banks, financial institutions, or companies. This allows them to be used anywhere in the world.
For example, Bitcoin claims that 'just as no one controls the technology behind email, Bitcoin has no owners either.' Thus, this type of cryptocurrency is controlled by all its users. Therefore, although programmers improve their software, they cannot make a change without the consent of all clients.
They are secure
According to experts, it is impossible to counterfeit or duplicate cryptocurrencies thanks to a sophisticated combination of proven cryptographic techniques. In this sense, each person has cryptographic keys that are necessary to carry out any type of digital operation.
