What is cryptocurrency and how does it benefit you?

Cryptocurrency?is decentralized digital money that is based on blockchain technology and secured by cryptogr... Woo Woo, slow down egghead!!

It’s time to simplify! What do you need to know?

A cryptocurrency, as its name refers, is a currency like the dollar. It means, it’s an active, a value instrument. Its most common function is to be transferred from one hand to another or “payments”, just like money as we know it.

There are 2 types of cryptocurrencies:

1.????With a stable price (or “stablecoins”) where their value is fixed. What this means is that there is a mechanism which makes them always value one dollar (1 cryptocurrency = 1 dollar), and in this way it allows you not to lose money.

2.????With variable price, where their price is variable and it depends on the trust of people who invest on them (bitcoin being the most popular example).

Then you might be asking yourself, why do we need them? Is it not enough the traditional currency? Why this alternative?

Despite sharing some functions with traditional currencies, there exists several advantages to using them:

1.????Low transfer costs: ?If I’d like for example transfer some money from Japan to United States, it would be as cheap as transferring to a person who is in the same room with me, and the transaction will be in just a few minutes (or seconds sometimes).

2.????Cryptocurrencies are decentralized: Probably one of the best potentials of crypto is that they don’t depend on a bank nor government. This means that they are not affected by the decision of few people (for instance: presidents who decide to print more money causing a devaluation of the currency). The logic behind cryptocurrencies is automatized by algorithm and adjust to certain rules.

3.????They are “stored” on a blockchain: This offers security, traceability and transparency.

Blockchain? Tracea… What?!!! I’m already lost!

Let me explain you easily: Blockchain is a data base which runs in a lot of computers around the world at the same time (nodes). All executed transactions are registered in all these computers, and anyone can check them. As the result of being stored in so many devices, it is practically impossible to hack the network, remove it or modify it, so it makes it a safe and transparent system.

Can anyone check the transactions? And my privacy?

Don't worry! On the blockchain we are all anonymous. You will be able to transact or store your cryptocurrencies in your virtual wallet without revealing your personal data to any person or organization, so they will not be able to associate what your operations are unless you say so publicly.

?All very technical, do I need to know that much?

Of course not! The only thing you need to know is that with a virtual cryptocurrency wallet (as if it were Paypal) you can buy them, and start using them as an investment or to send money to your friends.

? Currently, because of being a new ecosystem, anyone who starts using them is considered an "early adopter". As more people adopt and acquire them, the price of variable cryptocurrencies is expected to rise. For this reason, it is that those people who enter and invest in this ecosystem early could obtain good returns due to the increase in prices over time.

On the other hand (and no less importantly) a new financial system called “decentralized finance” (DEFI) is being created, about which I will write a separate article. In this new technology, there are new investment opportunities with high yields, new tools to apply for loans, etc. These tools open new possibilities to people who are not banked or who are looking for new opportunities to increase their capital.

?So let me ask you, Are you going to stay outside?

?For questions or queries, I invite you to get in touch.