Since a lot of time talk about cryptocurrencies like Bitcoin or Etherium, but the “boom” has been relatively recent, but … do you know what they are and what they imply? Well, let’s review the most important things that a cryptocurrency, a token and protocols entail.
What is a cryptocurrency?
The cryptocurrency is a digital currency, and is created with the purpose of being used as something similar to money, fulfilling its characteristics and functions. All the movements of this asset are recorded in an accounting book.
What is a token?
A token is a type of cryptocurrency and represents a currency or a financial asset. Almost all tokens today, perform the blockchain technology of Etherium using the standard known as ERC20.
The birth of these is financed by ICOs, an acronym for “Initial Coin Offering”. It is then when the tokens are generated, that they have a value due to their scarcity and demand and that they serve both to make payments and to store value.
And that protocol, what does it mean?
It’s a system of rules that allows two or more computers to communicate and be connected to each other to transmit information.
The innovation provided by the Bitcoin protocol has been to combine P2P technology with asymmetric cryptography. The unification of these technologies together with the structure of token incentives, encourages the use and participation of these protocols.
We are going to make a small definition about Blockchain, which is exactly the name that Bitcoin uses to provide secure and reliable transactions. To define it in an easy way, this transaction record is a shared book that serves to record the transfers of bitcoins, it is a network that is public, transparent and decentralized.
It should also be noted that these networks are maintained thanks to an activity called “mining”, and the miners are those who verify the transactions of the Bitcoin network using the Blockchain protocol, although not all users of the network have to mine.