Bitcoin – A Trending Cryptoactive
Although there are a large number of crypto active in circulation, the market is dominated mainly by Bitcoin (165 billion Euros), which is in first place, followed – by far – by Ethereum (20 billion Euros). These first two crypto active agents represent 75% of the total market value.
With Facebook’s ambition to also create its own currency “Libra,” which would be launched in 2020, cryptoactive agents are increasingly integrated into our daily lives.
Definition and operation of cryptoactive
Cryptoactive are digital objects using a computer network. A cryptoactive can be roughly considered as a “virtual currency,” even if legally, this term cannot be used to define it because they are not currencies
In order to carry out transactions (virtual money transfers) between two or more people on the computer network and to validate them, cryptoactive people use blockchain.
What is blockchain?
The blockchain (translation: blockchain) is a digital transaction register. It is a database which groups together all the transactions carried out since the creation of the blockchain (therefore since the first transaction) in the form of computer code
Each “block” groups together the operations carried out within a defined period of time (for example for Bitcoin, a block represents ten minutes of transactions, after 10 minutes, a new block is created following the first).
For the majority of cryptoactive agents, the blockchain is public. And on the other hand that the validation of a transaction between two people is done in a decentralized way, this means that there is not a single supervisory authority or institution to validate the transactions.
The blocks are validated by what are called “miners”. A minor is a person who makes his computer available on the computer network used by the blockchain. The validation of a transaction requires a large quantity of computers available in order to have sufficient computing power, which consumes a lot of energy. The various computers available verify that no one has tried to defraud and that the transaction is valid. But https://crypto-profit.io itself sufficient for all kind of bitcoin mining.
Once the transaction is validated, it is encrypted (translated into computer language) and dated to be integrated into the blockchain. Miners, also called network “nodes”, are paid for each “mined” block (validated, encrypted, and integrated into the blockchain).
The advantages of blockchain:
- security: once the transaction has been validated, it can no longer be modified, there is no “backtracking” possible,
- transparency and accessibility: the transactions recorded in the blockchain are visible to everyone (if the blockchain is public, the most widespread model),
- autonomous certification: without recourse to a trusted third party such as an institution or a control authority, or other, the costs are reduced, compared to the different technologies used, because there is only one intermediary, the minor
- Cryptoactives are therefore controlled directly by individuals; there is no longer a need to have a bank account to be able to transfer money. They are also secured by “private keys”. These keys allow you to open a digital wallet where the “tokens” are stored: a token (token) corresponds to a unit of the cryptoactive.
For comparison, if we take the example with the euro, the cryptoactive is the euro, and the token represents a one euro coin. These keys guarantee the anonymity and security of transactions (only you know your key).
The value of a cryptoactive will depend on its popularity and the use that users make of it. The greater the number of users of this cryptoactive, and the more the number of transactions with it, the more it grows in value.
As the value of the cryptoactive will depend on the number of tokens in circulation and the number of users, the network effect is essential for its development. Thus, if a company has a large number of users, it is in its interest to create its virtual currency. It is Facebook’s project with the creation of the cryptoactive “Libra,” which could be used by more than two billion people worldwide.
Can cryptoactives be used as a means of payment?
For a currency to be accepted as a means of payment, it must fulfill these three economic functions: (1) intermediary of exchanges, (2) unit of account, and (3) store of value