Bitcoin: the new digital gold and other currencies

Since its creation in 2009, by an unknown person under the pseudonym Satoshi Nakamoto, both those who adore him and those who hate him can agree on an affirmation: Bitcóin does not go unnoticed. In 2010, 1 Bitcoin was worth 0.003 cents of USD, today, only 11 years later, its price is trading between 50 and 60 thousand USD, representing a growth of more than 10,000%.

But what is there beyond Bitcóin? And why could it change the rules of the economic-financial system?

What are Stablecoins: “the” crypto product to save value in countries with high inflation

Bitcóin is the world’s first decentralized, secure, and unlockable digital currency.. Among its properties, we can highlight that is scarce (there will only be 21 million Bitcoins), transparent (we know how many Bitcoin units are being created every 10 minutes), its network is public (we can know in real time the transactions that are being carried out), it resists censorship (no government can block the network), easy to send and receive (as simple as sending an email), divisible (we can buy a fraction of Bitcoin, without having a whole unit) and unrestricted (anyone with internet and cell phone can have it). Because of these qualities, many analysts argue that Bitcoin is establishing itself as the new digital gold and could replace gold as a preferred store of value.

But the world of cryptocurrencies has a much broader horizon than that of its first creation. As the technology behind Bitcóin is open source, anyone can access it, improve it and even change it to create new projects, with different functionalities and objectives to Bitcóin. These projects also have their own currencies, called “Altcoins” or “Alternative Currencies”.

Many analysts argue that Bitcoin is establishing itself as the new digital gold and could replace gold as a store of value of choice.

The main “Alternative Currency” is Ethereum and it is not a mere copy of its predecessor. Launched in 2015, the function of Ethereum is not being the new digital gold (unlike Bitcoin, Ethereum does not have a fixed number of coins) snot function as a payment system for a global, decentralized computer and open source that allows you to create smart contracts. In this way, people from different countries can securely enter into virtual contracts with each other, on a neutral platform, protecting themselves from the legal insecurities that they could suffer in politically unstable countries or by people who wish to breach the agreement.

Given the relative ease with which it can be programmed on Ethereum, more than 100 programs, coins, video games, virtual worlds, collectible digital goods and even a new decentralized finance system (DEFI) have been created where a person can deposit their cryptocurrencies in “fixed terms” and obtain a “crypto income”, Without having to present your ID, address or any type of information that would be common to accredit to a bank.

Ethereum also allowed the creation of other types of currencies: the “Stable Coins” or “Stable Coins”

Ethereum also allowed the creation of another type of currencies: the “Stable Coins” or “Stable Coins”. These currencies (such as “DAI” or “USDC”) maintain their parity with the dollar, avoiding the volatility that cryptocurrencies can have. We could send DAI from Argentina to, for example, Japan, in a matter of minutes, and without the need to mediate with a third party. These coins also facilitated the “trading” of cryptocurrencies by being an excellent tool to freeze profits or take refuge quickly from a potential market crash.

Understanding the complexity of the world of cryptocurrencies is an open invitation to question the rules of the financial and governmental system as we know it today. today to enter the depths of a hyperconnected world where the territorial borders drawn by man are put in check. Regardless of the ups and downs that this crypto world may suffer due to the volatility of its currencies, a horizon is clear: Bitcóin was only the beginning, this is just beginning.

*Docentes of the Blockchain: cryptocurrencies and smart contracts program of the ITBA School of Innovation.

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