It is a virtual currency based on blockchain technology, which acts as a ledger in which operations are recorded and which has independent programmers as verifiers. In this way, transactions do not go through a single central place but are approved from different sites. The cryptocurrency is made up of a digital file with a unique code that is read through different programs that are used to view it, keep it and carry out transactions. Jorge Soriano, co-founder and CEO of Criptan, announces that it is “a new form of money that brings a different way of interacting with it.”
Bitcoin was one of the first cryptocurrencies to appear on the market. He did it from the hand of the Japanese Satoshi Nakamoto after the financial crisis of 2008. That year he published an article on bitcoin and generated a debate that led to the creation of software to carry out transactions.
It was about the creation of a decentralized digital currency, that is, without a central bank to control it, without commissions on its transactions, and without any elite group making decisions about its use or value.
Future of blockchain technologies
Surely at some point, you have heard the concept of the so-called blockchain. At its most basic level, it is a chain of blocks of digital information, in which information is stored in a public database (the “chain”). Through the combination of shared databases and cryptography, which ensures the security of exchanges, the blockchain allows multiple users to have simultaneous access to a large set of digital information. This is a concept that will revolutionize technology in the future.
It is a kind of account book distributed, transparent, and constantly updated with each transaction and that has no way of being reversible. It results, essentially, a shared public registry on which the entire Bitcoin network is based, where all confirmed transactions are included and distributed, generating the necessary trust for exchanges and making information much more difficult to manipulate.
This is how the blockchain works
First of all, to understand the impact it can have is to understand how it works. The most important practical result is that, for the first time, there is a “way by which any Internet user is able to transfer a single piece of digital property to another user in a way that ensures that the money transfer is secure and transparent.” The rest of the users can verify that the transfer has been made and guarantee its legitimacy.
Similarly, cryptography enforces the integrity and chronological order of the blockchain. This allows cryptocurrency wallets to calculate “the usable balance so that new transactions can be verified and thus guarantee the security of digital property”.
The system requires a specific type of users called a miner, who, organized in so-called mining farms, is in charge of providing with their computers the enormous computational power necessary to be able to verify transactions on the blockchain.
On the other hand, the nodes are the personal computers distributed all over the world with the software that stores and distributes the updated copy of the transaction log, in order to ensure “the fidelity of the transactions already verified by the miners”. Blocks of digital ownership are transferred over the chain, miners verify the veracity of the blocks, and nodes verify the work of miners.
Revolution or bubble
The blockchain has been touted as one of the most promising technological innovations in recent times. Still, like any disruption in today’s landscape, it is difficult to accurately predict its scope and impact. It is becoming more and more obvious that this technology is on the way to being one of the “most overvalued in recent times”.
Despite the fact that there are undoubtedly technological advances and interesting applications in the blockchain, the revolution that has been announced for several years has not yet occurred. Ethereum languages for smart contracts have the potential to become universal in the future, as in its day happened with the Windows operating system for computers or Android for smartphones.
Of course, for the moment the blockchain has not succeeded in replacing intermediaries in financial transactions like banks, also centrals , are still in command, nor has it turned entire economic sectors upside down, as predicted a few years ago, and “it does not seem that it is going to happen”, relates the Carpathians.
Today, the global financial industry successfully performs millions of transactions daily using algorithmic trading as a fast and efficient verification modality. While the Bitcoin blockchain is capable of processing four to seven transactions per second due to the necessary cryptographic verification of all transactions, Visa, for example, processes about 24,000.
However, there have been many financial institutions that have incorporated blockchain technology into parts of their business with the aim of “reducing costs and increasing efficiency” in the technological field.
The key lies in understanding that this technological innovation is directly linked to a substantial “paradigm shift in the way we share, exchange, store and verify information and money”.
However, it does not mean that it is without problems and that it has its limitations, nor that without the trust and support of users it will transcend in time, although the term blockchain is heard more and more in more places.
Is there a regulation for cryptocurrencies?
No, but since 2015 the European Union (EU) has considered bitcoin and other cryptocurrencies as a form of payment, with the same validity as the euro. Despite this, Christine Lagarde, the president of the European Central Bank (ECB), shows her reluctance and has declared that a regulation of bitcoin is necessary because it is “a very speculative asset.” The ECB has announced the creation of a digital euro, an electronic form of money that Europeans could use to make their daily payments as a complement to cash. It would not be a new currency or a cryptocurrency, but a digital euro would have the same value as a cash euro.