What is a Cryptocurrency?
A cryptocurrency is a medium of exchange, centralized or decentralized, that uses blockchain technology and cryptography to ensure the validity of transactions and the creation of new units of the currency.
Bitcoin was the first decentralized cryptocurrency created and today it is the most highly valued asset among its peers.
Bitcoin Characteristics:
- Decentralized
- Secure
- Transparent
- Private (although Bitcoin's path is public, the owners of the Wallets are 100% anonymous)
- Limited (the Bitcoin code allows the generation of only 21 million coins)
- Global (the whole world buys, sells, and uses Bitcoin 24 hours a day, 7 days a week)
How do cryptocurrencies work?
First of all, you need to understand that cryptocurrencies are virtual currencies, so it is not possible to make a physical exchange.
Therefore, they will only exist on the Internet, so it is not possible to store them in checking accounts, common brokerage houses or in safes, only in specific digital wallets called Exchanges
These cryptocurrencies arise through mining done on the blockchain.
And those who contribute to the creation of this blockchain end up receiving payment in cryptocurrencies that become available for circulation.
They are traded directly on Exchanges and also via investment funds or ETFs from investment brokers such as Rico.
What are cryptocurrencies used for?
Initially, cryptocurrencies were intended to serve as payment for miners on the blockchain.
Today, they can be seen as a means of exchange, being used to buy products and consume services.
Another major function of cryptocurrencies is their use as an investment alternative, as investors have begun to see that they can become a good store of value.
This is giving rise to companies that accept cryptocurrencies as payment, cryptocurrency investment funds, and many other opportunities for digital currencies to grow in the market.
Top cryptocurrencies on the market
Many people know the main existing cryptocurrency, which is Bitcoin, but other virtual currencies have been making success on the web:
- Bitcoin (BTC): This is the best known decentralized cryptocurrency in the world. It appeared in mid-2008, was already worth around 60,000 reais in 2020, reaching the incredible 350,000 reais in 2021.
- Ethereum (Ether): It is a decentralized platform that runs smart contracts and decentralized applications using its own blockchain.
- Dogecoin (DOGE): A decentralized cryptocurrency created to be a meme, but which gained the interest of the market and caught the attention of major investors, such as billionaire Elon Musk.
- Litecoin (LTC): Currency created based on and inspired by Bitcoin. Its main function is also to serve as a means of payment.
- Stablecoins: These are cryptocurrencies created to be less volatile, because their value is linked to that of a common currency.
It is possible for anyone to buy these assets or even invest in funds like HASH11, the first listed cryptomode fund (ETF).
