After 2020 full of uncertainty, 2021 is presented as the year of financial recovery in which a large amount of liquidity is ready to be invested in multiple assets. And now more than ever the time most talked about the criptomonedas or criptodivisas as a real alternative to a centralized financial system and as a good safe haven for years to come.
However, with so much noise on social networks and other media, we can certainly feel confused and not understand exactly what they are based on and how they work.
What are cryptocurrencies or cryptocurrencies?
The criptodivisas or cryptocurrencies are digital or virtual currencies designed to function as a medium of exchange. It uses cryptography to secure transactions or sending coins, as well as to control the creation of new units of a particular cryptocurrency.
In short, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are met.
Its main characteristics, as we have said, are:
- A cryptocurrency or cryptocurrency is a form of digital asset based on a network that is distributed over a large number of computers. This is what makes it decentralized (it does not depend on a large central computer).
- It is not a physical currency (although it can be stored on devices such as hard drives or external memory).
- S or creation is based on single encryption.
- They do not depend on anybody or the government that is responsible for generating this type of currency.
Functions of Cryptocurrencies
Cryptocurrencies are systems that allow secure online payments that are named in terms of virtual “tokens”, which are represented by internal accounting entries of the system.
“Crypto” refers to the various encryption algorithms and cryptographic techniques that protect these inputs, such as elliptical curve encryption, public and private key pairs, and hashing functions.
How many cryptocurrencies or cryptocurrencies are there?
Today there are more than 10,000 virtual currencies around the world and going up. In addition, every so often a new one appears, which is created through a process called ICO. What sets all these currencies apart is the technology, encryption, and philosophy they use. Most cryptocurrencies use Blockchain technology, but it is not the only one.
With the creation of new cryptocurrencies, new platforms have appeared to send, receive and buy different types of cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. However, we should not confuse these networks with wallets or with cryptocurrency buying and selling platforms. There are platforms such as Coinbase and Binance that are both buying and selling platforms and digital wallets that allow you to operate with cryptocurrencies or cryptocurrencies in a simple and secure way.
The latest news from the Blockchain boom increasingly predicts the consolidation of virtual currencies and also the arrival of more and more investors (even governments have already started buying these assets). We tell you which are the cryptocurrencies of the moment and those that seem to have the most future. For this we will choose the 10 largest currencies by market capitalization:
The ranking of the 10 most famous cryptocurrencies:
# Bitcoin (BTC)
Bitcoin is surely the cryptocurrency or cryptocurrency that you have heard the most about. The reason for the fame of this digital currency is that it is the pioneer. In 2008 it was created by various people under the name Satoshi Nakamoto. Of course, at its launch, it did not have the value that it has now and most could not even think that it would reach this data.
Without a doubt, this coin has positioned itself as a leader in the digital market. However, it has suffered great ups and downs and it is difficult to know when it will go up or down. That is why we propose other cryptocurrencies that are worth paying attention to.
# Etherium (ETH)
Etherium is not a currency, it is a decentralized computing platform. We could represent it as a large computer that is divided into multiple computers at the same time and works simultaneously. This computer network allows applications to be run on this distributed network and operations are powered by the network’s currency, ether (ETH).
The value of this cryptocurrency reached all-time highs in February 2020, touching € 1,700 per ether.
# Binance Coin (BNB)
Binance Coin is the official cryptocurrency of the Binance crypto exchange, whose name is an acronym made up of the words “binary” and “finance.”
This Binance coin was born to support transactions within Binance’s own platform. In this line, the Exchange developers try to increase the importance of their tokens through projects related to the Blockchain that can be financed by the users themselves with Binance coins.
# Cardano (ADA)
Cardano is the representation of the so-called 3rd generation of the Blockchain that tries to solve the scalability problems typical of 2nd generation blockchains such as Etherium. Over the last few months, Cardano has become one of the fastest-growing assets in the entire cryptocurrency industry, multiplying its value by more than 45 times in the last year.
Cardano is distinguished by using mathematical principles in its consensus mechanism and a unique multilayer architecture, which makes it stand out from other competing blockchains. With a team that participated in the creation of Ethereum, many are convinced that Cardano is the next generation of cryptocurrency solutions.
# Tether (USDT)
Tether is a stablecoin or stablecoin , that is, all cryptocurrencies of this type in circulation are backed by an equivalent amount of traditional fiat currencies, such as the dollar, the euro, or the Japanese yen.
Tether was specifically designed to build the necessary bridge between fiat currencies and cryptocurrencies and offer stability, transparency, and minimal transaction fees to users. It is pegged to the US dollar and has a 1-to-1 ratio to the US dollar in terms of value. However, Tether Ltd. makes no guarantee for any right to exchange or exchange Tethers for real money; that is, Tether cannot be exchanged for US dollars.
# Polkadot (DOT)
We could define it as a Blockchain protocol that tries to connect the different existing blockchains to a universal blockchain. It is one of the biggest current problems of the blockchain, the non-interoperability between the different chains (Bitcoin, Etherium,…).
Like most other blockchain infrastructure projects, Polkadot has its own native token. The value of the DOT cryptocurrency has multiplied more than 12 times in the last year, reaching highs in March 2021 worth € 33 per coin. Unlike the rest of the platforms, Polkadot is among the newest and introduces a series of novel technical features to achieve its ambitious goal of encouraging the spread of cryptocurrencies.
The DOT cryptocurrency plays a key role in the maintenance and operation of the Polkadot network. By owning and wagering DOT, users gain the ability to vote on network updates, and each vote is proportional to the amount of DOT crypto they own. That is what makes this cryptocurrency valuable.
# Ripple (XRP)
Ripple (XRP) for many experts is the successor to Bitcoin since this digital currency was created by the former developers of Bitcoin with the aim of improving performance. Ripple’s main goal is to connect banks, payment providers, and digital asset exchanges, enabling faster and more profitable global payments.
Like Bitcoin, Ripple is a totally secure and encrypted system whose transaction information is public but payment information is not. In other words, it is a confidential system where the sender and receiver are the only ones who have the information and the code that decrypts it.
# Uniswap (UNI)
Uniswap is a complex software that runs on the Ethereum blockchain and allows decentralized swaps. It works with the help of unicorns (as its logo shows).
At Uniswap, traders can trade Ethereum tokens without having to entrust their funds to anyone. At the same time, anyone can lend their crypto to special reserves called liquidity pools. In exchange for providing money to these reserves, you will earn commissions.
The Uniswap token has multiplied its value x10 in the last year reaching historical highs of € 28.64 per token.
# Litecoin (LTC)
Created by former Google employee Charlie Lee in 2011, Litecoin was launched as an alternative to Bitcoin. It has a higher limit than Bitcoin and there are currently about 60 million Litecoin in circulation. For this reason, there are many experts who bet on this cryptocurrency in the future.
# Chainlink (LINK)
One of the most relevant projects in the decentralized finance (Defi) ecosystem is Chainlink (LINK). It is a decentralized oracle service capable of providing external data to Ethereum smart contracts. In other words, it connects blockchains with the real world. The token or the currency of this network (the LINK) multiplied its value x13 in the last year and reached historical highs in February at more than € 29 per coin
The token of this network is the LINK and it serves as an incentive for node operators to do a good job. Each of the nodes that are installed and the request for information handled correctly allows both the nodes and their operators to accumulate tokens as compensation.
Highlights: cryptocurrencies with a future
Last year we talked about news in cryptocurrencies or cryptocurrencies that to this day have not yet finished taking off, but which are worth taking into account:
Not long ago a report came out commenting on the possibility that the European Central Bank could at some point issue crypto euros. A report named the advantages that the creation of this cryptocurrency would entail. Taking into account that currently most of the money used in Europe is digitized in the form of a credit card, and with a society accustomed to the use of digital money, the appearance of this cryptocurrency by the European Central Bank could reduce risks of insolvency in the entities and lower the costs of use for consumers.
This cryptocurrency created in the United States pretends to be the substitute for the dollar. According to its creators, Fedcoin is the dream of all bankers because it would be a 100% international and digital currency, in addition, the greatest risks to the economy, which are bank runs and hyperinflation, could be eliminated at once.
In early 2018 it was rumored that Facebook would launch its own cryptocurrency for payments within the social network. Today we know Libra, the cryptocurrency that Facebook presented with the support of more than 100 companies. It has finally gone on to completely restructure and look more like Paypal than Bitcoin.
What do you think of this news? We believe that they will not be the only ones to arrive this year, and we have to be aware of whether they really consolidate. Do you think other cryptocurrencies or cryptocurrencies are the ones that will sweep the market this year? Leave us your comments and share!
And if what you really want is to delve deeper into the world of finance, we recommend this Master in Blockchain and Fintech from IEBS with which you will learn the bases of these new payment and financing methods, to apply them within any business.