Cryptocurrencies: what are they and why do they matter?

Cryptocurrencies are becoming a reality and their arrival will have a seismic effect on industries and entire nations. Here we explain what you should know.

In recent weeks there has been an explosion in interest in cryptocurrencies. The word "Bitcoin" has reached its peak search on Google between, coinciding with the peak value of this virtual currency. For our country, the estimated transaction volume went from 100-120 thousand dollars per day at the beginning of the year to almost two million dollars (USD).

Thanks to the high financial returns of bitcoin and other digital currencies, this new concept has been gaining popularity among investor communities, the media, government authorities, and the population in general. According to The Economist, who would have invested a thousand dollars in bitcoins in 2010, would now have 36 million dollars (mdd). More recently, who had invested on the 1st of March in the cryptocurrency, would have doubled their investment in just 80 days.

This text will seek to answer the frequent questions that every person asks when they know about this innovation, namely: What is and why has the market value of cryptocurrencies become relevant? What is bitcoin? How is its value determined and how is it "printed"? Who supports it? What are the myths around bitcoin? How are cryptocurrencies similar and different from each other? You can find the all answers here Altcoin Sidekick.

What is the total market value of cryptocurrencies and why has it become relevant?

The total value of the cryptocurrency market, which at the end of the month was composed of more than 700 available currencies to transact, peaked at a market capitalization close to 90 billion dollars to finally close at 80 billion dollars in the last 15 days. Currently, this figure has been around $ 95 billion.

In particular, bitcoin currently has a market capitalization of more than 30 billion dollars. Also, the volume of daily transactions of the cryptocurrency is around 51 thousand bitcoins, representing around 1,500 million dollars. This is an indicator of high liquidity and easy transactionality, which places Bitcoin as the most popular digital currency. Definitely the increase in its value and the coverage it has in the media has paid for it to increase the interest on it.

What are cryptocurrencies?

Imagine that, instead of using coins and bills, the money was represented in giant stones anchored to the floor. Instead of moving the stones, only their property is transferred and everyone knows whose stones they are from. This makes it difficult to commit fraud, since you could not spend the stones of others, you could not use the same stone twice, and you could not carve a new stone either. This is the cryptocurrency concept, but unlike the anchored stones, cryptocurrencies can scale for more people to use them.

Bitlicense, the first license for digital currencies in the United States issued by the State of New York, defines cryptocurrencies as "any type of digital unit created or obtained through mathematical calculation, whose system is based on the internet and which is used as a means of of exchange or a form of digitally stored value ".