Cryptocurrencies: what they are, how they work and what others exist

We are going to try to clarify the simplest frequently asked questions so that from this information you can begin to enter the world of cryptocurrencies.

Cryptocurrencies

That’s the word that seems to be on everyone’s mind these days on par with terms like Bitcoin, Doge, electronic payment, etc. The truth is that it seems to be a second gold rush (as in the Old West), but there are still many doubts about it. We are going to try to clarify the simplest frequently asked questions so that from this information you can begin to enter the world of cryptocurrencies.

What are cryptocurrencies?

In very simple terms, a cryptocurrency, also called virtual currency or cryptocurrency, is digital money, as defined by the US Federal Trade Commission (FTC).

It means that this money does not have physical coins or bills and everything is handled online. You can transfer a cryptocurrency to someone on the internet without an intermediary, such as a bank (which you would need with “normal” money).

You might also like: 7 tactics to use LinkedIn to boost your brand

What is cryptocurrency mining?

It is how these digital currencies are made. These are created in computers whose owners make themselves known as “miners” because they always have their computers turned on that are connected in nodes with other miners to compute the coins and when they generate a new one, it is distributed among the nodes. This is known as “cryptocurrency farms.”

How many cryptocurrencies are there?

There are currently more than 8,500 cryptocurrencies, but there are certainly some more popular than others. The most recognized is Bitcoin, although there are others on the market. These are:

Bitcoin

It was the first cryptocurrency and was born as a system for the electronic exchange of money between individuals, allowing transactions to be made without depending on the authorization or verification of any institution, but instead enables operations autonomously and independently. The technology that supports and registers these exchanges is called blockchain, and its proposal is based on an open and transparent accounting balance system in which everyone can see how it works and that it cannot be manipulated.

Bitcoin is a well-known example of a cryptocurrency, and every four years the number of units produced is reduced by two, and only a total of 21 million Bitcoins will be issued.

DogeCoin

This cryptocurrency that was born a 2013 meme with the photo of a Shiba Inu dog. It was created in December of that year by Billy Markus, a programmer and former IBM engineer. This coin is based on Litecoin and has had the support of celebrities such as Elon Musk.

Ethereum

People are using Ethereum to create custom (but trusted) crowdfunding platforms, autonomous online organizations, and even their own cryptocurrencies.

Litecoin

If Bitcoin were gold, Litecoin would be silver. This coin works the same as its more popular counterpart but is worth a little less (there are a total of 21 million Bitcoin in existence against 84 million Litecoin). This coin is easier to come by and faster to move from person to person.

Ripple

While other cryptocurrencies avoid banks, Ripple embraces them. In fact, Ripple was made for banks as it allows them to make global payments faster and at a lower cost.

Dash

Think of Dash as a replacement for PayPal. Many merchants accept Dash just as they accept dollars, but the transaction is faster – you don’t have to wait a day or two to see the payment charged to your statement.

Zcash

If you want to maximize your confidentiality, this cryptocurrency is for you. Zcash has been dubbed the first “zero knowledge” cryptocurrency for its ability to “protect” the identities of all senders, receivers, and securities.

Monero

This coin was designed to give individual users full control over their money. With Monero, you are your own bank. The transactions are “selectively transparent”, which means that you decide who can and cannot see where your money is going.

Also read: 10 best ways to get 1000 followers per day on Instagram

How do cryptocurrencies work?

To invest in cryptocurrencies you must use Exchange Platforms known as Exchanges.

They are basically digital exchanges, they allow you to buy Bitcoin and other cryptocurrencies such as Ethereum, Litecoin, BNB, XRP, many more.

Binance is the platform with the highest trading volume in Mexico, as well as the largest offer with a sum of 150 cryptocurrencies, MEXO, Coinbase, and Crypto offers more than 50 cryptocurrencies. The most popular platform in the country is  Bitso, which has only 9 cryptocurrencies, but it is one of the safest.

Do I have to buy a full bitcoin?

In theory, yes, but the price of a complete Bitcoin is around 787,373.67 Mexican pesos, so most investors choose to buy fractions of the cryptocurrencies.

How much do I have to invest in cryptocurrencies?

Only you can determine the amount of capital you want to invest. A tip for any investment is that you allocate only the capital that you can afford to lose, that is, the one that you have left once you have already covered your expenses such as services, food, transportation, insurance, etc.

What should I do before investing in cryptocurrencies?

1. Research:  Do not enter the market until you have the minimum knowledge to be able to risk your capital. Remember that the cryptocurrency market is very volatile and you have to know how to wait to see the returns.

2. Plan: After knowing the conditions and rules of the game, it is necessary to design a strategy to capitalize on the characteristics and operation of the currency or currencies you choose, especially if you are looking to make a profit.

3. Buy on secure and trusted sites: Platforms such as Bitso, Binance, Mexo, Coinbase, and Crypto are as popular as they are practical in North America given the characteristics that each one offers to its users, both for the purchase of cryptocurrencies and for their trading functions, staking, among others.

Boost your brand

7 tactics to use LinkedIn to boost your brand

buy cryptocurrencies

4 cryptocurrencies you should buy in 2021