What are Cryptocurrencies and how do they work?

As moedas criptográficas, ou moedas virtuais, são meios de troca digitais que utilizam a criptografia para fins de segurança. A palavra "cripto" vem da antiga palavra grega, "kryptós", que significa oculto ou privado. Uma moeda digital que é criada e utilizada por particulares ou grupos tem múltiplos benefícios, vamos explicar-lhe quais.

What is a cryptocurrency?

Cryptocurrencies challenge the orthodoxy of how money works and while they excite some, they worry others. So what exactly is a cryptocurrency and why is it different? Unlike other currencies, all cryptocurrencies are fully digital. No cryptocurrency prints money or mints coins. Everything is done online, compared to conventional forms of currency that are generated by governments and then circulated through the economy via banks.

Value of a cryptocurrency

Cryptocurrencies do not depend on any of the traditional institutions. Instead, cryptocurrency is decentralized. Por outras palavras, é criada, trocada e regulada pelos seus utilizadores. As moedas criptográficas são "mineradas" (criadas) digitalmente. A questão de como as moedas criptográficas têm valor é complexa, e revela que qualquer moeda deriva o seu valor da fé no seu poder de compra.

Blockchain

In banking, this is done with ledgers that track the flow of money through accounts. With cryptocurrency, the task is accomplished with Blockchain, usando uma forma de matemática chamada criptologia. Blockchain é um registro seguro de cada transação feita. As transacções verificadas são adicionadas à cadeia de blocos como parte do processo de extracção mineira (de criação de novas moedas). A exploração mineira não se trata, portanto, apenas de criar dinheiro novo, mas também de validar transacções. Embora seja possível comprar moeda criptográfica - tudo o que precisa é de uma carteira digital criptográfica - e de encontrar locais que a aceitem (que são cada vez mais).

Applications of Cryptocurrency

Cryptocurrency could transform the way we transact. The so-called technology ledger (block-based record-keeping and validation technology) behind blockchains can be integrated into all types of business processes that require trust between multiple parties. This is because blockchain stores information that is both secure and transparent.

Very interesting, but how is this possible? For one thing, because of the blocks themselves. Now, instead of a long series of records, the information in a blockchain is cut into sealed blocks. Thanks to the use of cryptography, it is impossible to change or falsify the records in the block.

But what's inside these blocks?
Each block contains certain data, for example, when you sell a unique painting you want the block to have information about the name of the painting, the artist, the previous owner, the new owner, the time of the sale and the transaction. Alongside the data, each block has an identifiable hash. This is a unique code, which acts like a fingerprint.

Advantages of Cryptocurrency

The defining advantage of cryptocurrency is that it is not governed by any central authority or financial institution, making it immune to government interference or manipulation. This is called having a decentralized system. A centralized economic system, however, involves government or corporate control of the currency. Governments and central banks control the supply of currency by printing fiat currency units and controlling their value and transaction costs. In a decentralized economic system, the supply and value of virtual currencies are controlled by the users themselves, through highly complex protocols that use a peer-to-peer network.

Bitcoin

In 2009, Satoshi Nakamoto, a pseudonymous individual or group, proposed an electronic payment system based on a peer-to-peer network that is supported by cryptographic proof rather than relying on trust or a third-party system. Bitcoin transactions are recorded on a public ledger using blockchain technology so that everyone in the world can verify who gets paid first. Each transaction is viewed as a case-sensitive address that anyone can generate to receive the coins.

Altcoins

Nowadays, there are many alternative coins of bitcoin called altcoins. Most altcoins hope to replace or improve upon Bitcoin.

Alternative currencies can vary greatly from one another and each currency promises features such as faster transaction speed, more secure privacy, proof of purchase and many more.