Definition | Cryptocurrency – Virtual Currency

Cryptocurrency is currency Digital Decentralization that uses encryption algorithms and a protocol called blockchain To ensure reliability and tracking transactions. Cryptocurrencies are completely virtual, and can be stored in a digital wallet that is protected with a secret code of its owner. Exchange platforms (Binance, Coinbase, Bitstamp, etc.) are used to buy and resell cryptocurrencies online.

Cryptocurrencies originated from the Internet and globalization. Do not rely on a central bank They do not constitute official monetary units equivalent to the dollar, the pound sterling, or the euro. They have a real presence where they are used on the “web”. The most famous of them is Bitcoin, Ethereumripple EOSAnd the Litecoin, etc. There are two basic criteria that allow identifying a cryptocurrency.

Peer-to-peer currencies, no central bank

Cryptocurrencies are created on peer-to-peer relationships without the intervention of a central bank. They operate in a decentralized situation and have no legal tender even if certain countries regulate them – such as France where gains have been made on movements Cryptocurrencies transferred to the euro are subject to tax. This means that they are not dependent on a formal financial institution such as central banks. They are not tied to a reserve currency like the dollar or gold.

It is true that gold has not been pledged since 1971. The origins of cryptocurrency go back to libertarian philosophy or anarchist capitalism, which is very hostile to state intervention. In practice, however, the most stable of them, which are called stablecoinsRelying on an asset such as the dollar or gold.

Currencies without financial support

You will not be able to withdraw cryptocurrency from the bank counter to buy your baguette. This means that cryptocurrencies are purely electronic and do not exist in the form of coins or notes. Their use is much simpler because it is purely virtual.

How does cryptocurrency work?

Cryptocurrency is easy to understand. we distinguish proof of workThe proof of stake and buy currency.

• Proof of work or mining

principle Mining or Proof of Work developed by Bitcoin. Computer scientists called miners design and improve the algorithms that secure the blockchain. They are rewarded with virtual monetary units.

Proof of stake, participation or interest, is proof that a person owns a certain amount of cryptocurrency or Icons. We get a reward in return. This principle, which is relatively difficult to implement, is sometimes replaced by delegated proof of stake where users elect delegates in proportion to the number of tokens they own. These delegates then validate the blocks for compensation.

• Buy cryptocurrency

Without participating in a Proof of Work or Proof of Stake, it is still possible to purchase cryptocurrency.

Who manages the cryptocurrency?

Users and some large organizations manage the cryptocurrency.

users

Cryptocurrency users, especially minors or Knot, they are the first managers. They contribute to blockchains, which are virtual ledgers that store cryptocurrency transactions.

Java and Bitcoin

Facebook plans to launch its own cryptocurrency under the name Diem, which was originally called Diem Balance. It’s a matter of backing them up on government securities and fiat currencies. But the project is under particular criticism from France. United kingdom It plans to create Bitcoin, a new state-backed cryptocurrency. So it would be appropriate to expand the concept Cryptocurrency.

Value driven by scarcity, such as precious metals

Generally, cryptocurrencies are designed to generate a known and limited amount of tokens. In the case of Bitcoin, it is expected to produce 21 million tokens by the year 2140. New tokens are automatically allocated to miners: these are blockchain nodes that validate transaction blocks by solving cryptographic algorithms.

During the early years, the number of Bitcoin Massively generated: 50 per block. this is the sound Two halves every 4 years, during an event called a “halving”. This process allows cryptocurrency to gradually increase in scarcity, by making it increasingly difficult for Mining. It aims to imitate natural resources such as metal The value and protection of the virtual currency from hyperinflation.

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