What cryptocurrencies are and how they work: Bitcoin and Ethereum

Terms such as "cryptocurrencies" or "blockchains" have become shortly the buzzwords in the world of finance. With economic knowledge or not, people are beginning to realize that Bitcoin and Ethereum can be a reef.

Investing and trading with electronic currencies is becoming the latest in cryptocurrencies and, although it is not too late to get on the train, finding a way to do so can be an arduous task.

To get an idea: 1 bitcoin (the cryptocurrency most in vogue today) is worth more than 13,000 euros this Wednesday, December 27 and in the last seven days the price has fluctuated between a maximum of 15,200 and a minimum of 9,000 euros.

Although blockchain technology is still in its infancy, it will soon become something that everyone will use without really knowing how. For many people, it will be like going back to 1994, when the Internet or email was still in development.

What cryptocoins can you buy?

There are thousands of different cryptocurrencies, with more or less value and popularity, and every day there are new options. That said, we must highlight the two most widespread and profitable digital currencies: Bitcoin and Ethereum.

Bitcoin

CoinDesk defines Bitcoin as "a type of cryptocurrency born and sustained electronically, nobody controls it, they do not print like dollars or euros: people generate it, and more and more companies and computers around the world are able to solve math problems".

As a digital currency, Bitcoin was the first and the most important in using blockchain technology, which means that it is decentralized, without any person or institution being able to manipulate it, and bases the verification of transactions on the interaction between same.

Ethereum

Here things get a little complicated. Although Ethereum is listed as a bitcoin-style cryptocurrency, Lachlan Feeney, developer of block chains at Civic Ledger, a company that uses this technology to solve problems in the public sector, says it is much more than that.

He explains that Ethereum can be described more closely as the next step of the Internet based on blockchain technology, a tool that will allow people to develop their own applications, businesses and projects in a completely decentralized manner in which users can invest.