5 keys to understanding cryptocurrencies: what are they? since when do they exist?

Basically, they are digital currencies that use encryption that allows their owner to be identified and transactions to be carried out safely.

In fact, one of the advantages that its supporters always highlight is that any operation with cryptocurrencies is easily traceable because it uses

which also prevents copies and forgeries.

They can be purchased through portals such as Binance, Coinbase or the Spanish Bit2Me, which act as intermediaries, just like

They buy shares on the stock market.

They can then be transferred to so-called digital wallets: there are hot ones — connected to the Internet — or cold ones — which can be accessed without a network connection.

Both need passwords: if their owners lose them or die without communicating the keys to friends or relatives, they can become impossible to access and therefore lose large amounts.

The first cryptocurrency,

appeared in 2008. Since then, its number has multiplied, and today there are about 20,000, although many of them have little value.

Very few businesses accept them as a means of payment – ​​there are credit cards linked to the accounts where the cryptocurrencies are.

The car manufacturer Tesla even accepted bitcoin as a means of payment to buy its electric vehicles in the US for a few months, before rectifying it alleging environmental reasons – mining to create them uses a lot of energy, which is not respectful with the environment. —.

The first transaction, in 2010, was the purchase of two pizzas from the US chain Papa John's.

They were valued at $41, and were sold for 10,000 bitcoins because the price of the cryptocurrency was so low at the time.

The person who bought them, Laszlo Hanyecz, a programmer from Jacksonville, Florida, offered that amount on an Internet forum to whoever would send them home.

One user agreed to do so, and Hanyecz transferred the bitcoins to his account.

If he had kept them, he could trade them today for $400 million.

No one knew then that they would rise in value so much but, seen in perspective, it could be said that it was the most expensive meal in history.

Since we cannot go to the supermarket and make purchases with them, cryptocurrencies are not considered a means of payment.

Much clearer and more widespread is its investment role.

A bitcoin is exchanged today for around 40,000 dollars (about 37,000 euros).

If someone bought five years ago, they have multiplied their money by 30. But if they bought a year ago, they are losing more than 25% of their investment.

It is this possibility of getting rich that causes the attraction of cryptocurrencies.

And also its great danger: organizations such as the European Central Bank or the CNMV have warned that the possibility of losing all the investment is real.

There is no reliable data on how many cryptocurrency owners there are in Spain or in the world.

It is known that the combined value of all cryptocurrencies today is close to two trillion dollars, something above what Google or Amazon are worth on the stock market.

Of them, bitcoin accounts for 40%.

Its price moves 24 hours a day, seven days a week.

Unlike the stock market, oil or raw materials, there is no market to close, and anyone can trade at any time, which, if left unchecked, can encourage somewhat obsessive behaviour.

Behind each of them, there are digital entrepreneurs who in many cases have become billionaires, such as Chris Larsen, the founder of the Ripple cryptocurrency.

Far more mysterious is the identity of the creator – or creators – of bitcoin, who hides under the pseudonym Satoshi Nakamoto.

Australian businessman Craig Steven Wright, 44, has confessed to being behind that false name, but it is not clear that it is true.

The rise in the list of the richest in the world of the biggest names in cryptocurrencies is evident.

The financial portal Bloomberg places, for example, the Chinese-Canadian businessman Changpeng Zhao, CEO and owner of Binance —one of the platforms for buying and selling cryptocurrencies—, as the richest man in Asia, with a fortune of 96,000 million dollars, close to that owned by Facebook founder Mark Zuckerberg.

The detractors of cryptocurrencies remember that their creation - the so-called mining - needs computer equipment working at maximum performance, so it spends a lot of energy and leaves a huge carbon footprint.

In one year it is estimated that it consumes as much energy as Sweden in the same time.

In the financial field, large organizations have repeatedly warned that its volatility —large price changes in short periods of time— invalidates it as a means of payment.

Its defenders believe that there is room for mining to be done from renewable energy sources, and argue that we should not only look at what they are now, but what they will be in the future, when their price may become more stable.

They see them as an asset similar to gold.

And remember that more and more institutional investors are incorporating them into their portfolios.

In an era where there is a trend towards deregulation in sectors such as transportation or accommodation with the emergence of Uber or Airbnb, they highlight that cryptocurrencies can become a kind of popular and decentralized money, because it does not need central banks to issue it or no one to control it.

Time will give and take away reasons for one or the other.

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