CRYPTOCURRENCY

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DEFINITION

A cryptocurrency is a digital asset that uses cryptographic encryption to guarantee its ownership and secure the transaction device, and control the creation of additional units, that is, prevent someone from making copies as we would, for example, with a photo. These coins do not exist in physical form: they are stored in a digital wallet.

HOW DO CRYPTOCURRENCIES WORK?

Cryptocurrencies have various differentiating characteristics compared to traditional systems: they are not regulated or controlled by any institution and do not require intermediaries in transactions. A decentralized database, blockchain or shared accounting record is used to control these transactions.

In line with the regulation, cryptocurrencies are not considered a means of payment, they do not have the backing of a central bank or other public authorities and they are not covered by customer protection mechanisms such as the Deposit Guarantee Fund or the Fund Investor Guarantee.

Regarding the operation of these digital currencies, it is very important to remember that once the transaction with cryptocurrencies is carried out, that is, when the digital asset is bought or sold, it is not possible to cancel the operation because the blockchain is a record that It does not allow you to delete data. To reverse a transaction it is necessary to execute the opposite one.

Since these coins are not physically available, you have to resort to a digital cryptocurrency wallet service, which is not regulated to store them.

ADVANTAGES OF CRYPTOCURRENCIES

The main advantages that characterize cryptocurrency are:

*Low transaction costs, as a consequence of the absence of intermediaries.

*Security, because each coin belongs only to its owner.

*Anonymity, the transactions that are carried out are anonymous.

*Transparency, since the transactions are included in a freely accessible record.

*Easy, you can make a transaction of any amount, anywhere in the world and at any time or day.

*It accumulates in a tiny space such as a USB.

DISADVANTAGES OF CRYPTOCURRENCIES

On the other hand, the disadvantages are:

*Volatility of its prices.

*Lack of current acceptance by some companies.

*By not needing a regulator such as the Government or the Central Bank and providing privacy, they can be used for illegal transactions.