We are going to explain to you what #cryptocurrencies are, so that if you have heard about #Bitcoin or something similar, you can know exactly what it is about. It is a type of digital means of exchange that has been with us for over a decade, but it has been in recent years that its popularity has increased.

In addition to explaining what they are, we will also try to briefly and simply explain how they work internally, in addition to mentioning some of the others that currently exist and are being talked about.

What is a #cryptocurrency

#Cryptocurrencies, which can also be called crypto currencies or crypto assets in some areas, are a digital means of exchange. It serves the function of a currency, and hence they are known by that name. However, it is something entirely digital, using cryptographic methods to secure its financial transactions, control the creation of new units, and verify the transfer of assets.

Therefore, we can consider them as a decentralized alternative to digital currencies. With the term "decentralized" we refer to the fact that these currencies are not controlled by a single service or company. This is not the case with conventional currencies, which are centralized and organized by entities and banks, so they are an opposite method to both.

The first #cryptocurrency was #Bitcoin created by "Satoshi Nakamoto", a pseudonym that corresponds to a person whose exact identity is unknown. This person published an article in 2009 describing a P2P payment system that he called #Bitcoin. After a few months, he published the first version of the software that allows managing the currency's network and started interacting in forums with the first interested parties.

It is still not known exactly who this person is, but it is known that they have become one of the 20 richest people in the world. #Bitcoin and its technology have had such an impact that over the years more and more alternatives have emerged, new alternative #cryptocurrencies that have been increasing in value with varying success. Since then, as we will see a little later, a large number of different #cryptocurrencies have been created.

#Cryptocurrencies can be used as a payment method in some cases. Additionally, they can also serve as a way to send money to people living in countries where you cannot normally send it with your bank, or to make payments that are not recorded anywhere.

Another thing you should know is that the value of each #cryptocurrency is variable, and that recently there has been speculation similar to stock assets. Therefore, many people are creating wallets in services where they can buy #cryptocurrencies, and trying to buy them to sell later and thus make money.

It is not advisable to get into this if you don't know, because there can also be abrupt drops in the value of #cryptocurrencies and end up losing money. However, if you have #cryptocurrencies, it is also important to know this, since if you are going to operate with them for payments, you should know that you may encounter variable prices for this reason. There are several alternatives to see the value of #cryptocurrencies.

How #cryptocurrencies work

To understand how #cryptocurrencies work, you must also understand several basic concepts. The first is that it is based on a decentralized network of computers, which consist of nodes spread all over the world with copies of all the transactions that have been made. The second concept is that of miners, people who are part of the nodes, and who have the incentive that every time new #Bitcoins are generated, they are distributed among those who are part of these nodes.

Another important concept is that of exchanges, which are companies that allow you to exchange currencies like euros or dollars for #Bitcoins and enter the world more easily. When you obtain them, they are stored in 'Wallets', which are applications that allow you to keep or exchange them.

Each #cryptocurrency has its own algorithm, which is what manages the number of new units that are issued each year. For example, we have #Bitcoin, which every four years reduces the amount produced by half, and only a total of 21 million #Bitcoins will be issued. This is a fundamental difference from conventional currencies, since banks modify their value at their discretion. This gives it more capacity to generate value compared to currencies that can devalue when banks say.

And since the algorithms of different #cryptocurrencies are different, the maximum number of units of each crypto currency also varies. This can also affect its value and performance, although it is not something that basic users need to worry about too much.

This decentralized network of computers with different nodes is known as a blockchain. Its blocks or nodes are linked and secured using cryptography. Each block links to a previous block, as well as a date and transaction data, and by design, they are resistant to data modification.

Therefore, it is as if this network or blockchain were a free, open, and public ledger in which all transactions made by two users are recorded. When you make a transaction, its data is recorded in a block, and it is automatically replicated in the rest. This makes it so that the data cannot be modified or manipulated without changing the rest of the blocks, something extremely complicated.

What other #cryptocurrencies exist

As we mentioned before, #Bitcoin began to take its first steps in 2009. Since then, over time, more and more new @cryptocurrencies have emerged. Some have been establishing themselves for years as robust and popular alternatives like #Ethereum, #Litecoin, and similar ones. #Ethereum even has a new version called #Ethereum 2.

But there are also some new surprises like the newly arrived #Dogecoin, a cryptocurrency created for fun and based on a meme.

And like this, there are many alternatives with rising values, and new ones coming out. Some notable names among the most valued are Binance Coin, XRP, Cardano, Tether, Polkadot, Uniswap, Chainlink, or Bitcoin Cash. However, most of them remain with a value that is far from that of the three giants, which are #Bitcoin, #Ethereum, and #Ethereum 2.

But to conclude, we must also mention stablecoins. They are a type of #cryptocurrency whose value is linked to that of another asset, such as conventional currencies or precious metals. This allows one to take advantage of the benefits of #cryptocurrencies for transactions and investments, but without the volatility that characterizes most of them.