Cryptocurrencies are a digital or virtual currency designed to function as a medium of exchange.
These coins serve the same purpose as the money we use every day, allowing us to pay for products or services. However, since it's digital money, it can be hacked, which is where cryptography comes into play.
Cryptography is the science of encrypting a message so that it can only be read by the intended recipient. This way, when we send cryptocurrency to someone, we use cryptography to ensure that the currency cannot be intercepted and stolen.
In this image we see how cryptography prevents you from being able to interpret the message sent if you are not the recipient or sender.
This technology is not only used to ensure that cryptocurrency transactions are secure, but to control the creation of new units of a particular cryptocurrency.
In short, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are met.
Characteristics of cryptocurrencies
Its main characteristics, as we have said, are:
A cryptocurrency is a form of digital asset based on a network distributed across a large number of computers. This is what makes it decentralized (it doesn't depend on a large central computer).
It is not a physical currency (although it can be stored on devices such as hard drives or external memory).
Its creation is based on unique cryptography.
They do not depend on any organization or government that is responsible for generating this type of currency.
Functions of Cryptocurrencies
Cryptocurrencies are systems that enable secure online payments and are referred to in terms of virtual “tokens,” which are represented by internal accounting entries within the system.
“Crypto” refers to the various encryption algorithms and cryptographic techniques that protect these inputs, such as elliptic curve encryption, public and private key pairs, and hash functions.
