WHAT YOU SHOULD KNOW
HOW DOES THE CRYPTOCURRENCY MARKET WORK?
The cryptocurrency market works in a decentralized manner and is based on blockchain technology that guarantees the security of its transactions. Although each of them may have specific rules and mechanisms for their operation, there are some general characteristics that can be listed and that facilitate their understanding:
BLOCKCHAIN: Unless it is a token, all cryptocurrencies use blockchain technology, a decentralized and secure digital ledger that allows verified operations to be carried out through a network of computers called nodes.
The blockchain helps record and verify all transactions made with the cryptocurrency and each of them is grouped into blocks, which in turn join a chain of blocks sequentially, thus creating an immutable and transparent history for everyone.
CRYPTOGRAPHY: This type of digital currencies use the cryptography technique to protect privacy between users, authenticate transactions and also control the issuance of new currencies.
MINING: Some cryptocurrencies use the mining process to validate and secure transactions on the network. Miners use their computing power and solve mathematical problems to verify and secure transactions in exchange for receiving rewards in the form of new cryptocurrencies.
However, there are cryptocurrencies that have a limited supply, meaning that only a finite number of new units will be created, to avoid inflation and maintain the value of the cryptocurrency in the long term. The issuance of new ones may be scheduled or may depend on a community consensus.
WALLETS: Wallets are applications or devices that allow users to store and manage cryptocurrencies.
