Investing in virtual currencies can lead to some confusion, between what they really are and the technology that allows them to be exchanged. (REUTERS).
The endless economic crisis complicates the investment possibilities for those who still have some weight after having made all the payments of the month. Fixed term? Dollars? Docryptocurrencies?
The latter option has grown exponentially in recent years. About 1.3 million Argentines (almost 3% of the population) are already engaged Bitcoin, Ether Y Bindamong many, as a store of value.
The investment in virtual currencies they can lead to some confusion between who they really are and the technology that allows them to be exchanged. Therefore, here we explain what is the difference between Blockchain and cryptocurrencies.
What is the Difference Between Blockchain and Cryptocurrencies
A representation of the virtual currency Bitcoin and small toy figures are placed on the computer motherboard in this illustration taken on January 7, 2021. The photo was taken on January 7, 2021. REUTERS / Dado Ruvic
The comparison most used to define the Blockchain technology, in Spanish “chain of blocks”, consists in thinking of it as an accounting “ledger”, but totally digital and decentralized. It is a category database Distributed accounting technology (DLT) which allows the recording of transactions of tangible and intangible assets.
A tangible asset can be a car or property and an intangible asset, copyrights, trademarks or patents. Thanks to blockchain, the people involved in the transaction get a copy of the record. However, there are no copies or different versions, rather it is a single record. In other words, the participants of that network have access to the “ledger” and its “immutable record” of transactions. But no one can modify or falsify a transaction.
Unlike a notary, real estate agency or bank, there is no centralized intermediary here that validates information transferred from block to block. This verification is distributed in several independent modes. It will only be validated if the majority of the people involved agree.
On Tuesday, May 31, 2022, the Bitcoin logo next to a cryptocurrency cash machine (ATM) in Bucharest, Romania. Cryptocurrencies have re-established their tendency to trade in tandem with stocks after last week’s divergence raised concerns that investors would continue digital token dumping even amid a resurgence in demand for other risk assets. Photographer: Andrei Pungovski / Bloomberg
Each chain lock includes the transaction package and two codes. One indicates which is the previous block and the other the next. That is, they are chained together by codes called hashes.
When a transactionlike the passage of a cryptocurrency from one user to another, the system creates a public record, placed in an encrypted block and linked to the previous and subsequent blocks by the hash. When the good passes from one place to another, the block chain (blockchain).
This chain is irreversible, because each additional block reinforces the verification of the previous one and, finally, of the entire chain. To make transactions faster, there is a set of rules known as smart contracts, or “smart contracts”, which are automatically executed to define the conditions of certain transactions.
The pizza in gold and precious stones which represents the value of the amount paid in the first physical transaction with cryptocurrencies. photo Bitso
This technology allows the existence of cryptocurrencieswhich were born in 2009 with the most popular of them: the Bitcoin. The cryptocurrencies they are digital, intangible assets that have no physical form and are not regulated by an institution, such as the Central Bank.
Currently there are thousands of cryptocurrenciesin addition to the pioneer Bitcoin, developed together with blockchain by a person or group known under the pseudonym of Satoshi Nakamoto. The next in popularity is Ether (ETH), based on the Blockchain platform called Ethereum. Finally, among the most popular, it is Bindor USDT, a stablecoin, or stable currency, because its value is tied to the dollar.
The processing and recording of transactions is in the hands of another group of users: i digital miners. In computer jargon, “mining” is about verifying transactions by solving complex mathematical puzzles. As a reward, the “miners” receive small amounts of cryptocurrencies. In Argentina, more and more young people are investing in special equipment, known as SO Cto process and post transactions.
Source: Clarin
