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What are cryptocurrencies and what are they used for?

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Cryptocurrencies are digital forms of money that use cryptography to ensure secure transactions and control the formation of new entities. They operate in a decentralized manner, meaning they are not controlled by a government or central authority. Instead, cryptocurrencies use blockchain technology, which is a public, distributed ledger of all transactions made with that cryptocurrency.

Bitcoin was the first cryptocurrency to be introduced in 2009, and since then thousands more have emerged, each with their own specific properties and applications. Cryptocurrencies are used for a variety of purposes including investing, trading, and online financial transactions.

Main features:

  • Decentralized: You are not dependent on a central financial institution.
  • Immutable: Transactions recorded on the blockchain cannot be changed.
  • Secure: Cryptography protects transactions and user data.
  • Pseudonyms: Users are not identified via their real name, but via a wallet address.
  • Cross-border: They allow you to send and receive money anywhere in the world without high commissions.

What are cryptocurrencies used for?

Cryptocurrencies have a variety of uses, including:

Payment Methods: Some companies and businesses accept cryptocurrencies as payment for goods and services.

Investment: Cryptocurrencies can be bought and sold on exchanges, making them a potentially profitable investment asset.

Transfers: They can be a quick and inexpensive way to send money to family and friends in other countries.

Decentralized Finance (DeFi): It allows users to access financial services such as loans, savings and wealth management without the need for intermediaries.

Application development: They can be used to create decentralized applications (dApps) that offer a wide range of services, from games to marketplaces. The world of cryptocurrencies is very broad, which is why platforms like Immediate ProAir x2 have emerged that specialize in making it easier for those interested to access information and learn.

Examples of different types of cryptocurrencies:

Coins:

  • Bitcoin (BTC): The first and most famous, with a focus on security and decentralization.
  • Litecoin (LTC): A “silver coin” for Bitcoin with faster transactions and lower fees.
  • Dogecoin (DOGE): A meme cryptocurrency that started as a joke but is growing in popularity.

Utility token:

  • Ethereum (ETH): The second largest with a platform that allows the creation of smart contracts and dApps.
  • Binance Coin (BNB): The Binance exchange cryptocurrency used to pay fees and receive discounts.
  • Chain link (LINK): A token that provides real-world data to blockchains.

Stablecoins:

  • Tether (USDT): A cryptocurrency pegged to the US dollar designed to minimize volatility.
  • USD Coin (USDC): Another US dollar-pegged stablecoin issued by a consortium of companies.
  • Dai (DAI): A decentralized stablecoin backed by a basket of cryptocurrencies.

Security token:

  • Polymath (POLY): A token that represents traditional financial securities such as stocks and bonds.
  • Securitization (SECU): A platform for tokenizing securities.
  • Tokeny (TEN): A platform for issuing and managing security tokens.

Non-fungible tokens (NFTs):

  • CryptoPunks: A collection of 10,000 unique pixel characters.
  • Bored Ape Yacht Club: A collection of 10,000 NFTs of bored monkeys.
  • NBA Top Shot: A platform to buy and sell NFTs of NBA highlights.

These are just a few examples of the different types of cryptocurrencies that exist. There are thousands on the market, each with its own properties and uses. It is important that you do your research before investing in any cryptocurrency.

Risks Associated with Cryptocurrencies:

  • Volatility: The price of cryptocurrencies can fluctuate significantly.
  • Lack of regulation: In many countries the market is still unregulated.
  • Internet security: They can be a target for hackers.

Before investing in cryptocurrencies, it is important:

  • Learn more about the different cryptocurrencies and their features.
  • Understand the risks associated with investing.
  • Only invest the money you can afford to lose.

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