Do you want to start investing in cryptocurrencies, but you don’t know what they are and what the benefits are? You are in the right article to learn more about this type of currency. Cryptocurrencies are a type of digital currency (they do not exist in physical form) that serve as an exchange currency, allowing instant transactions over the Internet.

They use cryptography to provide a secure payment system. Their data encryption technique is used to verify transactions and create new units, so they do not need a central bank or other institution to control them.

This virtual currency is based on blockchain technology, which acts as a ledger where all operations are recorded and transactions are controlled. In addition, independent programmers are used as verifiers, so that transactions are approved from different sites.

This technology provides them with a high security system with the capacity to prevent, for example, the same digital asset from being transferred twice or being counterfeited.

The cryptocurrency consists of a digital file with a unique code that is read by different programs used for viewing, storing and transacting.

It is important to note that when buying or selling a digital asset, it is not possible to cancel the transaction because the blockchain is a registry that does not allow deleting data, so in order to “reverse” a transaction, it is necessary to perform the opposite action.

In order to have access to cryptocurrencies, a “wallet” (digital purse) is required, which is a software or application where it is possible to store, send and receive digital coins.

Unlike a physical money purse, the wallet stores the keys that give ownership and rights to the cryptocurrencies.

The main characteristics of cryptocurrencies are:

  • Cryptography: They use encryption techniques to make secure payments and collections.
  • Decentralization: They do not need to be controlled by any institution.
  • No possibility of forgery or duplication: A cryptographic system protects users.
  • No intermediaries: Direct person-to-person contact.
  • Transactions are irreversible: Once payment is made, there is no possibility of cancellation.
  • They can be exchanged for other currencies.
  • Privacy of use: It is not necessary to reveal your identity when doing business.

The main advantages that characterize the cryptocurrency are:

Low transaction costs: Cryptocurrencies, such as Bitcoin and Ethereum, offer significantly lower transaction costs compared to traditional money transfer methods. This is because there are no financial intermediaries involved, such as banks or payment processors, which eliminates the additional fees that typically apply in conventional transactions.

Security: Security is a fundamental feature of cryptocurrencies due to the underlying technology called blockchain. Each cryptocurrency transaction is recorded in a block on the blockchain, and once confirmed, it is virtually impossible to alter. In addition, the advanced cryptography used in cryptocurrencies ensures the security of transactions and ownership of digital assets, as only the owner of the private key can access and transfer funds.

Transparency: Blockchain technology provides a public and decentralized record of all cryptocurrency transactions. This means that anyone can access the complete transaction history, ensuring full transparency and verifiability of transactions. The inherent transparency of cryptocurrencies promotes trust among users and reduces the risk of fraud or manipulation.

Compact storage and portability: Cryptocurrencies can be securely stored in digital wallets, which can be as small as a USB device or even in a cell phone application. This feature allows users to carry large amounts of value conveniently and securely, without having to rely on physical financial institutions. In addition, this portability facilitates the transfer of funds globally and quickly, regardless of geographic boundaries.

On the other hand, the disadvantages are:

  • Price volatility.
  • Lack of current acceptance by some companies.
  • As they do not need a regulator such as the Government or the Central Bank and provide privacy, they can be used for illegal transactions.

The first cryptocurrencies

Bitcoin was one of the first cryptocurrencies to appear on the market, created by “Satoshi Nakamoto”, the pseudonym of a Japanese man who in 2009 published an article describing a P2P payment system he called Bitcoin. A decentralized digital currency, that is, without a central bank to control it, without commissions on its transactions and without any elite group making decisions on its use or value.

Currently, bitcoin is the seventh most capitalized asset in the world, around 700 billion dollars (almost 575 billion euros). According to data from CoinMarketCap, a website that shows the market capitalization, there are more than seven thousand types of cryptocurrencies and the most popular are: bitcoin, ethereum, litecoin, dash and ripple.

Globally, the total supply of bitcoins is 16.35 million, which is limited by code to 21 million. This code establishes that bitcoins will continue to be generated until the year 2140.

An unconventional currency

Cryptocurrencies may one day replace cash and credit cards, but for now, all existing digital currencies are considered to be worth only a small percentage of the world’s physical money.

Any cryptocurrency is a complex instrument that may not be suitable for those who do not have sufficient knowledge, however, they can become a good business if you like to take financial risks.

The key to a good investment is to analyze the market, carefully study the behavior of cryptocurrencies and consider various investment strategies, whether in times of economic stability or uncertainty.

In conclusion, cryptocurrencies represent an exciting investment opportunity in today’s financial landscape. Their growing popularity and the innovative technology behind them make them an attractive asset for many investors.

At Algo Global, we understand the importance of keeping abreast of the latest investment trends. For this reason, we offer our clients the opportunity to diversify their portfolios, including cryptocurrencies. Our team of experts is here to provide guidance and support as you explore this exciting world of investment opportunities.

If you are interested in investing in cryptocurrencies and want the support of experienced financial professionals, do not hesitate to contact us. We are here to help you achieve your financial goals safely and successfully.