What are cryptocurrencies?
Cryptocurrencies are virtual currencies that are not linked to any state or central bank. They are based on the data encryption technique (cryptography), which is used to verify transactions and create new units, called coins.
Cryptocurrencies can be bought with traditional payment methods. Some of them can also be mined. Mining requires specialized equipment, skills and time. This type of extraction consists of solving complex algorithmic problems by means of hardware.
The advanced technology that cryptocurrencies are based on prevents hacking and theft. A purchased or extracted cryptocurrency is stored in a cyber wallet protected by keys - randomly generated strings of characters and digits.
There are companies available that store private collections of cryptocurrencies, keys and paper wallets, an offline cold storage method. Of the two types of keys, one is used to secure capital, the other is used to secure the transaction.
Cryptocurrencies are not created as technological equals. They differ in storage methods and circulation. Virtual currency transactions usually take place directly between the seller and the buyer in a peer-to-peer (p2p) model.
An example of the technology used for transactions is blockchain. This is a type of distributed database that can be used to post a growing number of records called blocks. They are all connected and each contains a complete register made available to transaction users without the use of a central database. This technology makes it possible to verify transactions and prevent cyber attacks.