If you are one of those who still do not understand what Cryptocurrencies are and how they work, we help you with this little guide in which you will learn the basic concepts that you must know to understand everything around Bitcoin, Ethereum and other cryptocurrencies.
1.- What is a cryptocurrency?
To begin, it is necessary to clarify the main term: what is a cryptocurrency?
Regrettably, there is still no "official" definition, since the term has not yet been included in the dictionaries nor has the Royal Academy of the Language of any Spanish-speaking country agreed to define the word.
However, in English there is already a definition provided by the Oxford dictionary, which states that it is "a digital currency that uses encryption techniques to structure by means of defined rules the generation of currency units and to verify transactions in a independent to any bank.
Also, the Cambridge dictionary poses a similar definition: "It is a digital currency produced by a public network instead of any government, which uses encryption to ensure that payments are sent and received securely."
2.- Mining
This is one of the most used terms and can generate more confusion among people who are just beginning to document the concepts related to cryptocurrencies.
Mining refers to the process in which Cryptocurrencies are created as well as the process by which transactions are made possible in a decentralized and secure manner.
This occurs through a p2p network through the "miners", who are people who participate in the computational processing necessary for the Blockchain (explained in the following point) and for which they usually receive a payment in the same cryptocurrency in which they are undermining as a bonus for their participation.
Mining involves the use of computers with very powerful processors (CPU or GPU) so it is a very lucrative business currently but that requires a hardware infrastructure of considerable cost.
3.- Blockchain
A blockchain or chain of blocks, is a kind of public database in which remain permanent and tamper-proof records of the transactions made and of the mined cryptocurrencies.
The Blockchain is maintained by all computers that participate in mining and are validated simultaneously to avoid errors and ensure transparency.
In this way, Cryptocurrencies represent a completely transparent and decentralized alternative for any bank or government to carry out monetary transactions
