Digital world: Finance & Technologies (II)

Currently and around the world there are excellent and beneficial crypto assets and cryptocurrency projects underway. Due to the great relevance that they are having in these times, it is essential to know and understand as best as possible what Cryptoactives and Cryptocurrencies are and all their associated terminology and technology.

What is blockchain?

Blockchain Technology, also known as Blockchain makes mention of that technology that involves the sequencing of blocks that store information within a network, and that must and are verified by the users of the same from its creation to the end. And where each block contains a hash pointer to its predecessor block, creating an interconnected network.

In a Blockchain, a hash is nothing more than a set of random digits that serves as a small representation of other data of any size. It is used in the prevention of fraud on said technology.

Thus Blockchain becomes a kind of articulation of structured technologies in a naturally encrypted system, which provides a safe and reliable means for users, their identities, data and transactions, without the need for intermediaries, through the Internet.

Digital Mining

Digital Mining usually refers to the act (methods or actions) of solving a block, validating all the transactions it contains to obtain a reward in return.

It is the process by which a host (node) solves cryptographic operations within a Blockchain, which usually create tokens, crypto assets or cryptocurrencies as final products.

In the said act, a node verifies a transaction as valid, to then pack it in a block together with its corresponding hash, then select the hash of the previous block and add it to the current one. It then runs the native Blockchain consensus algorithm to ensure that a node has made the necessary efforts to complete the allocated block and receive its corresponding reward.

In Digital Mining, the «Consensus Algorithms» are nothing more than the set of rules to determine which copy of the Blockchain is valid and which is not. The best known are Proof of Work / POW and Proof of Stake / POS.

Apart from the «Consensus Algorithms», the well-known «Encryption or Encryption Algorithms» are also often used, which are functions that transform a message into a random unreadable series

Tokens, Crypto Assets and Cryptocurrencies Are they the same?

Within a Blockchain, Tokens are usually defined as a cryptographic token that represents a unit of value that can be acquired through it to later be used to obtain goods and services. Among many things, a Token can be used to grant a right, pay for work done or to be executed, transfer data, or as an incentive or gateway to related services or functional improvements.

While a Cryptoasset is usually defined as a special token that is issued and traded within a blockchain platform. It also usually refers to each of the different existing tokens (cryptocurrencies, smart contracts, governance systems, among others) and other forms of goods and services that use cryptography to function.

A Cryptocurrency is one of many types of Crypto Asset, which in turn, is a category of what is known as a Digital Asset. Where a Digital Asset is considered as something that exists in a binary format and comes with its respective right of use, that if it is not owned, it cannot be considered as a digital asset. A Digital Asset can be a digitized document or a multimedia file (text, audio, video, image) in circulation or stored on a digital device.

Where are cryptocurrencies traded?

A Cryptocurrency Exchange refers to those websites in which cryptocurrency buying and selling actions are carried out. These also usually allow operating with other types of assets such as shares or financial securities accepted by the members of the community that makes it up.

The main objective of a traditional or decentralized Exchange (DEX) is to allow its users (Traders) to participate in the managed crypto market to achieve profits based on price variations (free values) that occur in it.

In addition, most are usually highly regulated platforms, which comply with the standards of KYC (Know your customer) and AML (Anti-Money Laundering). And they usually charge for their services and establish certain capital limitations to participate in their platform.

Additional information is still available in the first part of this article click here

Source: DesdeLinux

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