What are Cryptocurrencies and how do they work?

What are Virtual Currencies?

Cryptocurrencies or virtual currencies are financial assets Virtuals that are secured through cryptography, this system ensures that they are not duplicated or spent more than once.

Many of the virtual currencies or cryptocurrencies are decentralized using block chain technology or (blockchain) which consists of several computers that keep and control the accounting file of transactions.

Another feature is that cryptocurrencies are not generated by any central bank or manipulated by any government.

The highest authority is the system that controls each transaction. The system automatically audits which wallets each cryptocurrency has and ensures that they are not spent more than 1 time.

What is and how does the chain of blocks work that makes it so secure?

When buying, the block will contain the date, time, amount of the trade and the participants of the trade.

In the case of Bitcoin or another cryptocurrency, only the wallet where it comes from and where it goes will be visible. The owner is 100% anonymous. Each block is differentiated by a unique code called “Hash”, which are cryptographic codes generated with special algorithms.

The nodes/miners do their job to confirm or deny the trades. If an operation is verified, the nodes that are connected to each other confirm that it is correct. If a node tries to confirm an invalid operation, it will be automatically sanctioned and temporarily excluded from the network.

Each block is stacked one on top of the other and in chronological order and interconnected with a previous operation. Each block contains a “Hash” number that is part of the “Hash” calculation of the new block.

Types of virtual currencies

There are different types of Cryptocurrencies. Each has characteristics that make them special, with significant variation.

Over time each coin confirms and reinforces its market value and integrity. Some features are mentioned below:

Bitcoin was the first to offer a reliable decentralized and cryptographic system.

Ethereum was the first to develop a coin integration with smart contracts (Autonomous).

Ripple allows financial institutions (such as banks and exchange houses) to reduce costs and achieve faster transactions.

The ALTCOINS are all the coins that came out after Bitcoin that have different characteristics and particularities.

ICO’s are an acronym that refers to Initial Coin Offerings, which were created to finance new projects.