Cryptocurrencies are digital investment assets with a volatile behavior on the rise and fall in price. Yes, it is a way to invest your money in the form of analysis and a bit of luck, speculation helps these digital assets to obtain reliability in the market, as more institutions, people give them reliability and use cryptocurrencies generates a positive impact on the market, creating an upward trend in price and therefore profits for those who acquired a low cost.
There are several digital currencies such as Bitcoin, Ethereum, Litecoin, Dogecoin among others, which over time have become a controversial issue. The comedian John Ovilver who described cryptocurrencies in an ingenious phrase, which referred to the fact that the fundamental pillars of cryptocurrencies are monetary theories, blockchain theory. I will emphasize the cryptocurrency of bitcoin, and I will explain what it is, and how this digital currency works.
What is bitcoin?
It all started in 2008 by Sotoshi nakamoto, who was the one who gave the idea of (bitcoin) «a user-to-user electronic cash system» this system attracted a lot of people’s attention and is a way to make purchases and sales digitally, this was going to be done differently than it is today since it is not connected with the government or with the banks, that is why it ensures that many problems such as inflation do not happen, since the bank it has the power to print money at will and that can cause the money to become worthless, and cause it to lose purchasing power over time. Another problem is that the banks are connected with the government and he has the right to intervene in our accounts in exemption cases, in conclusion, he holds our money and prohibits us from withdrawing it. Therefore, bitcoin is a good idea, since it is a person-to-person transaction, therefore bitcoin is stored in so-called wallet that is a digital wallet, which is for personal use, and which does not show Personal data are anonymous transactions, and we attach access to them wherever we have the internet, it is worth mentioning that it is open source, this means that anyone in the world can see it, and comment on its operation.
How bitcoin works
To begin with, this digital currency is similar to that of banks since it has a record of transactions from user to user, it is a book called Ledger where the transactions made from 2008 to now appear, it is anonymous, its transactions only appear to be the number of wallet, and it is decentralized, meaning that anyone can have a copy of that book. The node has the function of making the operation effective and not a fraud, if so, the traction is rejected. The way they work is as follows: the nodes verify that the operation and send them to the miners.The function of this is to maintain the security of the network, and they will include the transaction in a block, this block is referred to a previous one and thus the term of Blockchain was given which is chain of blocks and from there deciphering each block is a task which brings a reward, that is the work function of Bitcoin.
Bitcoin is a way to invest your money since in the future it will serve us financially if it continues to increase its value in the market, it is an easier and almost free way to make transfers in the world without having banks or governments involved.