CRYPTOCURRENCIES FOR DUMMIES

WHAT ARE CRIPTOCURRENCIES?

A cryptocurrency is a digital value exchange unit used to send and
receive payments through computers connected to each other.
The prefix "crypto" is used, alluding to the cryptographic system by means of which
create, store and transfer units or cryptocurrencies.
The cryptocurrencies are, in essence, software and work through P2P networks (Peer
to Peer) on the Internet.

We can say that it is a new concept of money that would work privately
between users who own it and exchange it. They can be bought and exchanged for
"traditional" money and they are quoted in markets where their value is speculated, such as
It happens with the common currencies.

They are created, mostly, through a computer process called "mining"
or they are distributed; by analogy, the "miners" are the people who give up the power
of computing your computer to the network that supports each currency, extracting,
"mining" cryptocurrencies.

DIFFERENCES WITH "NORMAL" MONEY OR FIAT
When comparing cryptocurrencies with common money (also called fiat, that is,
our current use money like the dollar or the bolivar), the difference more
important is that they are not backed by any State, central bank or institution
financial

No group or individual, no institution or country, can manipulate the amount of
money that is "created", since only a certain amount is generated collectively, to a
speed that is limited by a previously defined and known value
publicly

All transactions made are registered in the chain of blocks for
keep fraud under control and give transparency to the network.
The transactions, moreover, in most cases are completely anonymous (no
can identify the identity of those who make them). In addition, the "directions" of
sending and receiving virtual money are generated randomly in the form of a key
alphanumeric

Its use has no commission charged, except for exceptions, and in low amount.
As a last big difference, we have that your exchange is immediate from any
party to any other part of the world, without relying on intermediaries, taking
account only the time that these may take to be verified in the chain
of blocks.

HOW DO YOU GET AND STORE?

Cryptocurrencies can be achieved in 3 main ways: by buying them,
mining them or exchanging them for goods or services.

Buying them In specific markets, through payment gateways or directly
to other owners, with fiat money (bolivars, dollars, etc.).

Mining them. Connecting your computer to a specific mining network for each
type of cryptocurrency and computing block chains to receive a reward in
cryptocurrency every so often. (There is a kind of second-rate cryptocurrencies
generation that does not work like this and does not require mining).

Exchanging them Accepting cryptocurrencies for physical objects or in exchange
of certain services.

Unlike a physical currency or bill, a cryptocurrency is a digital asset that is
store in an electronic purse. They are not deposited with any entity or
bank but stored by each user on their own computer, in a special type
of a program called purse or wallet ("Wallet" in English).

WHAT ARE THE CRYPTOCURRENCY FOR?

Like traditional money, it is meant to be used to buy things. Today I already know
They can exchange for goods and services. There are many companies throughout the
world -increasing in number every day- that offer their products accepting as
I pay one or several cryptocurrencies in exchange.

The other use, in fact majority today, is speculation. As its value
depends exclusively on supply and demand, its price, that is, the price that
They have, it varies a lot in a short time. This volatility allows investors
speculate with its value, buy and sell cryptocurrencies to obtain a profit
derived from its operations. There are several markets where it operates and speculates with
cryptocurrencies daily.

Another possibility is to buy them and wait months or years until their value increases,
as we would with any other investment.

THE BITCOIN, THE PIONEER

The first cryptocurrency was bitcoin, created in 2009 by the developer or group of
Anonymous thinkers: "Satoshi Nakamoto." Bitcoin has become very famous as
criptodivisa by, in addition to being the pioneer, having exceeded in a few years the value
of more than $ 8,000. It is the most used cryptocurrency of all.
With the same name, bitcoin, the protocol that supports the network of
exchanges that may have other uses.

In contrast to fiat money, bitcoin and many other cryptocurrencies use a
work test system (known as PoW, from the English Proof of Work) that
simulates the mining of raw materials.

The offer of bitcoins is regulated by the software itself and the consensus of the users
of the system and can not be manipulated by any government, bank, organization or
individual. The limited increase in the money supply of the bitcoin system (the
creation of new coins) is distributed evenly (depending on the power
computational) to the participating nodes, called miners, that contribute to
Secure the network.

ADVANTAGES OF THE CRIPTOCURRENCIES ...
Cryptocurrencies and their protocols are an innovative technology - at the same time that
exciting sociological phenomenon - that can revolutionize the way in which
we exchange value. They offer the user an opportunity, advantageous in different
contexts, to exchange money, trade in its value, invest it or develop other
uses and functions applying the same system that cryptocurrencies use.
The most important points in favor of cryptocurrencies are that they decentralize the
flow and exchange of money (they are not subject to political decisions that affect their
production), do not require a bank to make a transfer to another person and
no account and credit card maintenance fees are associated
to sell or buy products and hire services.

... AND ASSOCIATED RISKS
Despite these advantages, there are some risks that are necessary to know. They are
still a new technology, which must be stabilized. They assume such novelty for the
world economy, it is difficult to foresee its future, however it is estimated a substantial
growth and acceptance worldwide.
The most important associated risks, today, are the following:
 They are not official currency. They should be treated as private money because they do not count
with the endorsement of central banks or financial institutions, nor are they regulated.
Its value could disappear without guarantees.
 Its value is very volatile. The price at the exchange of a cryptocurrency can go up or
go down a lot in a very short time. In fact, he usually does it.
 Portfolio management depends on the user, who stores the money
on your computer. The security of money depends on the measures adopted
every owner of cryptocurrencies.