The new “crypto” market: its use and meaning in the virtual environment
Hello guys! You've probably heard about the keywords in this post: cryptocurrencies, bitcoin, future bank. If you're feeling kinda “FOMO” about the subject, you are in the right place! Let's start from the beginning, talking about the meaning of these topics that are highlights in the financial market.
Cryptocurrencies are a decentralized digital currency, which means: they are not controlled by any specific body or country. They are created on a blockchain network (it works as a public record of financial movements and transactions) that is responsible for securely storing the most diverse types of information.
These cryptocurrencies generated on the blockchain have a value that, in some cases, can be converted to other currencies, such as the dollar or real, therefore, they can be used as an exchange currency for the purchase of products and consumption of services.
Can I exchange cryptocurrencies for physical money?
No! Cryptocurrencies are virtual currencies, so it is not possible to make a physical exchange.
Therefore, they will only exist on the internet, and it will not be possible to store them in the current account, common brokerages or in safes, only in specific digital wallets called Exchanges. These cryptocurrencies arise through a "mining" done on the blockchain.
And whoever contributes to the creation of this blockchain ends up receiving payment in cryptocurrencies that become available for circulation. They are traded directly on Exchanges and also via investment funds or ETFs from investment brokers such as Rico.
Within the computer network, although everyone needs to authenticate a transaction, only one is needed to form a block that will be inserted into the chain along with the others. The information stays in the so-called “mining pool” waiting to be inserted in the formation of a block.
When a computer manages to put together all the information to form a block, it finds a kind of fingerprint (hash11) that must be compatible with the previous block. Thus, the block is formed, registered on the chain and the computer receives an amount of cryptocurrencies for the work.
-> As this is a super complex operation, computers with greater capacity are needed to mine and get rewards in cryptocurrencies.
This mining method is called proof of work, and it is used to mine Bitcoins.
Is Bitcoin a Cryptocurrency? Are there any other types?
Yea! It is the best-known decentralized cryptocurrency in the world. It appeared in mid-2008, and it was already worth around 60 thousand reais in 2020, reaching an incredible 350 thousand reais in 2021.
Other cryptocurrencies use different methods, which require less computing power. One of them is the Proof Of Stake (proof of stake), where operators prove that they have a certain amount of assets before the mining of new coins is released.
It is a decentralized platform that runs smart contracts and decentralized applications using its own blockchain.
Mining on Ethereum is paid for in Ether (ETH) which is your cryptocurrency in circulation.
Decentralized cryptocurrency created to be a meme, but which gained market interest and caught the attention of major investors such as billionaire Elon Musk.
Coin created based on and inspired by Bitcoin. Its main function is also to serve as a means of payment.
They are cryptocurrencies created to be less volatile, as their value is linked to that of a common currency. Cryptocurrencies created by governments follow this pattern.
It is possible for anyone to buy these assets or even invest in funds such as HASH11, the first listed cryptocurrency fund (ETF) on the Brazilian stock exchange.
HASH11 is a cryptocurrency ETF, an investment fund that replicates the index of the main cryptocurrencies on the market, the Nasdaq Crypto Index (NCI).
In practice, anyone who buys a share of HASH11 is investing in the possibility of yielding the main combined cryptocurrencies.
This investment is very interesting for those who understand little about cryptocurrencies and want to diversify their virtual currency portfolio.
It also serves as a protection for the cryptocurrency wallet, since while one crypto may be falling, the other may be rising in value.
And what are these for?!
Initially, cryptocurrencies had the function of serving as payment for miners on the blockchain. Currently, they can be seen as a means of exchange, being used for the purchase of products and consumption of services. Another great function of cryptocurrencies is their use as an investment alternative, as investors began to see that they can become a good store of value.
Now that you've been introduced to the subject and can understand a little more about its basis, it's time to bookmark this blog on your e-mail addresses and stay tuned every week for our articles about the virtual financial market!
See you next time, folks!