Alejandra Ramos Barreda
(CNN Spanish) – The conversation about cryptocurrencies is becoming more and more frequent, either because of events that remind us of their volatility, because of their close relationship with the meme culture – a clear example is dogecoin – or because of the suggestion that “they are the future of finance ”, as put it by investor Ian Lee. How did they become popular and what distinguishes them?
Cryptocurrencies: we explain it to you
The new way of finance
The idea that cryptocurrencies are the future of finance materializes with proposals such as those of Mastercard and Visa, who recently announced that in the near future they will allow their customers to pay with some cryptocurrencies. Likewise, Venmo – PayPal’s payment platform – also announced that its more than 70 million customers can buy cryptocurrencies such as bitcoin, ethereum, and litecoin within its platform.
Brian Brookes, CEO of Binance.US told CNN that in the future “the idea of moving your fiat money to your crypto wallet will really have no meaning, at that time we will be completely networked, just like we are connected to the Internet for everything. the rest”.
Brookes also spoke of the benefits of the decentralization of the cryptocurrency market, compared to the current financial model that has an intermediary, since cryptocurrencies are not controlled by any authority, be it bank or government. “In a free society, the goal of decentralization is to say: let’s get rid of that and let’s all be free. Let us all have access to our money and all the transactions that we want to do as free people, that is a very fundamental ideology that empowers a large number of cryptocurrencies, and that is what decentralization is all about ”.
These are the most relevant cryptocurrencies 1:07
In just eleven years, the value of the cryptocurrency market went from zero to $ 2 trillion. Currently more than 106 million people around the world use cryptocurrencies, according to a report by Crypto.com and there could be more than 4,000 in circulation, according to Statista.
The widespread adoption of cryptocurrencies has grown and in part accelerated thanks to the covid-19 pandemic, as they are seen as an investment to protect against inflation in times of economic uncertainty.
However, if you are a newcomer and you are thinking of entering this market, experts indicate that it is necessary that you do it with caution and education. “Many digital currencies have different use cases, and you must understand the value proposition of a potential investment before committing capital,” Grayscale Investments CEO Michael Sonnenshein told CNN.
Among the most important cryptocurrencies are Bitcoin (BTC), Ethereum (ETC), Binance Coin (BNB), Cardano (ADA) and Dogecoin (DOGE), and below we explain some of their most important differences.
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Bitcoin as a national currency
Recently, El Salvador became the first country to adopt bitcoin as its national currency, turning the Central American country into a radical monetary experiment that could pose risks to its fragile economy.
Recently, bitcoin is used as legal tender in El Salvador alongside the US dollar. When President Nayib Bukele announced the plan in June, he indicated that all “economic agents” would accept cryptocurrency as a form of payment. He also said that tax payments can be made in bitcoin.
Bukele’s government buys 400 bitcoin coins, an operation that would be around US $ 20 million
Salvadorans will be able to download the digital wallet, “Chivo Wallet”, an application created by the government, to send and receive bitcoins, as well as to make purchases in stores. In order to promote its use, the government of El Salvador is offering US $ 30 in bitcoins for those who download the app.
At the beginning of September the value of a bitcoin was roughly $ 46,844, so $ 30 equals 0.0006 bitcoin, according to the Exchage Rate.
“Like all innovation, the #Bitcoin process in El Salvador has a learning curve. Every road to the future is like this and not everything will be achieved in one day or one month, ”Bukele tweeted. “But we must break the paradigms of the past. El Salvador has the right to advance towards the first world ”.
The World Bank says it will not help El Salvador implement the bitcoin law
However, the International Monetary Fund (IMF) does not welcome the use of bitcoin as legal tender, claiming that doing so raises a number of economic, financial and legal problems.
They incorporate bitcoin as legal currency in El Salvador 0:50
Bitcoin is the strongest cryptocurrency, according to data from CoinMarketCap.
This cryptocurrency was created in 2009 by an unknown person (or persons) under the alias of Satoshi Nakamoro, and works thanks to blockchain technology, or chain of blocks in Spanish, which is a kind of ledger where the transactions carried out are recorded. through cryptocurrencies.
Unlike other cryptocurrencies, the value of bitcoin is determined by the finite number of coins that can be created, which is 21 million.
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Not all bitcoin coins are in circulation and new bitcoins are generated by a complex, decentralized process known as “mining.” Computers are used to mine bitcoins to solve complex mathematical problems, a process that has generated concern about its environmental impact.
When it comes to determining its value, it falls on supply and demand. This is the reason why a currency volatile and difficult to predict. For example, in January its value increased to $ 42,000, then fell to $ 31,000 and then rose to $ 40,000, all in the course of a week.
Cryptocurrency analyst Willy Woo posted on his Twitter account that “in terms of adoption, Bitcoin has almost the same number of users as the internet had in 1997. But Bitcoin is growing faster. If it stays at this rate for the next 4 years, Bitcoin will reach 1 billion people, that is equivalent to the Internet in 2005 ″.
Ethereum, also known as ether, is the second largest digital currency, according to data from CoinMarketCap.
Ethereum was created in 2013 by Vitalik Buterin, a 27-year-old Russian-Canadian programmer and so far this year its value has soared 465%. In part, this is because Ether is more than a cryptocurrency, as it is used to transact non-fungible tokens (NFTs), a technology that allows buying and selling digital art, such as the first tweet. from Jack Dorsey, CEO of Twitter that was sold for $ 2.9 billion.
In fact, the Merriam-Webster dictionary just released the definition of the word NFT as an NFT.
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Everything you need to know about NFTs 1:03
Ether was the most traded cryptocurrency for February 2021 with more than 1.3 billion times a day, according to Statista; by comparison, Bitcoin reported 283,000.
Binance Coin (BNB)
Binance Coin is the third largest cryptocurrency according to data from CoinMarketCap.
Changpeng Zhao founded Binance in 2017 in China and later moved its headquarters to Malta, following the increasing regulation of cryptocurrencies in the Asian country.
How bitcoin mining works
Unlike the other cryptocurrencies, binance coin – created by the cryptocurrency platform with the largest trading volume in the world by Binance Exchange – can be used to be exchanged for other cryptocurrencies such as bitcoin and to pay fees within the Binance Exchange platform. Customers who pay with binance coin within the platform receive a discount as an incentive.
Binance has a maximum limit of 200 million tokens, although each quarter Binance uses 20% of its profits to “burn” binance coins, destroying them completely, reducing the total supply and stabilizing their value.
Cardano is in fourth place among cryptocurrencies, according to data from CoinMarketCap.
Cardano’s cryptocurrency is named after Ada Lovelace in honor of a 19th-century mathematician recognized as the first computer programmer. This cryptocurrency can be used as a native token within Cardano, an open blockchain platform that is overseen by the Cardano Foundation that was created in 2015 by Ethereum co-creator Charles Hoskinson.
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Unlike bitcoin and ethereum, which use a proof-of-work (PoW) system for mining coins, cardano uses a proof-of-stake (PoS) system which uses considerably less energy. “Cardano, for example, is 1.6 billion times more energy efficient right now than bitcoin,” Hoskinson told Forbes.
Every year bitcoin consumes more electricity than Argentina and leaves a carbon footprint comparable to Switzerland’s, so the environmental footprint behind cryptocurrency mining has raised concerns.
Salary in cryptocurrencies, a bill in Argentina 0:30
Dogecoin is “the fun and friendly internet currency,” according to its website.
Unlike bitcoin, which has set the number of coins available in the market at 21 million, dogecoin has 129 billion coins in circulation and each year it will make available new blocks of coins to mine each year. This is one of the reasons why dogecoin is valued at roughly 40 cents, while a bitcoin is worth roughly $ 42,000.
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Dogecoin was created as a joke in 2013 by software engineers Billy Markus and Jackson Palmer, the latter who bought the domain dogecoin.com in reference to the “doge” meme, the most famous Shiba Inu on the Internet. On dogecoin.com, your mascot has a title: “Dogecoin is an open source peer-to-peer digital currency that is favored by Shiba Inus around the world.”
In this year, the value of dogecoin soared more than 7,800%, according to data from CoinDesk. This coin is also popular within the Reddit community, who have taken on an investor role by skyrocketing in value. However, dogecoin is subject to extreme volatility, so its value could fall without warning.
Elon Musk Says He Will Send Dogecoin To The Moon 0:39
With information from Anneken Tappe, Paul R. La Monica, David Goldman and Clare Duffy.
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Differences between cryptocurrencies: bitcoin, dogecoin, ethereum and binance coin – KVIA