Cryptocurrencies are like digital money, but without bills or banks controlling everything. And it uses a wonderful and powerful technology called blockchain so that no one can easily counterfeit or hack it.
These virtual currencies
* They are not printed by a government (like the dollar or euro), but created by a network of computers.
* They are decentralized: There is no central bank; all users help maintain the system.
* They use cryptography (ultra-secure mathematical codes) to protect them.
How do they work?
Keep in mind a giant ledger (the blockchain) where everyone can see the transactions, but no one can delete, change, or modify them.
1. Transaction: Adam sends 1 Bitcoin to Eva.
2. Validation: Computers called miners (or nodes) check that Adam has that Bitcoin and approve the transaction.
3. Record: The transaction is written in a "block" and added to the chain (blockchain). It is now public and immutable!
4. Reward: The miners who helped receive a little bit of crypto as payment.
* There are no intermediaries (like banks).
* It is transparent: Everyone can see the transactions (but not necessarily who made them).
* Limited: Many cryptos (like Bitcoin) have a cap on units (only 21 million will ever exist!).
But in what way or how can we use it?
- Invest (buying with the expectation that their value will increase).
- Pay (more and more stores or services are accepting them).
- Send money quickly to other countries without banks.
The best examples:
* Bitcoin (the pioneer and the best).
* Ethereum (makes smart contracts, like automatic agreements).
* Dogecoin (started as a meme).
* Risks? Volatile (their price goes up and down a lot), and if you lose your digital password (private key), say goodbye to your cryptos!
I hope this is valuable to you. Success and blessings to all !!! $BTC
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