An introductory look into cryptocurrencies
Cryptocurrencies are part of the new form of the value exchange system
The term refers to its electronic nature, since it needs a digital data base and a virtual network, connected to the internet, to transfer the currency. The prefix “crypto” relates to the cryptographic technique to create, store, and transfer the coinage itself. In a few words, a cryptocurrency is an electronic coin used to purchase goods and/or services.
Many companies and countries are integrating this system into their financial cultures, establishing credit and debit cards, ATM’s, and the exchanging of virtual currencies for physical coinage at authorized offices. Even though it does offer some benefits, experts have stated that there are real risks when dealing with decentralized coins platforms. The dangers are also increasing as more people are investing in the cryptoeconomy.
Cryptocurrency made its first appearance in 2009. Asian businessmen created BITCOIN as a response to the economic crisis and global recession that took place in 2008. The primary objective was to protect people’s money from economic breakdowns and mistakes related to the financial liquidity of banks and governments. They aimed for a secure system that guaranteed a controlled trade of goods and services on the web. In 2011. BITCOIN reached the value of the dollar; in 2012, it was defined as an official virtual exchange currency, and in 2013, the first BITCOIN ATM is inaugurated in Vancouver, Canada.
Currently, the value of 1 BITCOIN is $235 dollars, approximately, and an estimated 1 billion dollars are now being transferred in form of BITCOINS around the globe. There are other types of cryptocurrencies with different characteristics emerging strongly in the market, such as Quobits, Novacoin, and Ethereum. Companies like Microsoft, Dell, Overstuck and Tiger Direct are already using cryptocurrencies as payment methods for their customers.
In Latin America, cryptocurrencies started gaining followers quickly. In Chile, the ether, Ethereum’s crypto coin, became well known thanks to the decision of a Chilean currency exchange office to include it as one of their monetary options on their brochure.
In Costa Rica, BITCOIN has been integrated into the banking system, and some local companies, like TyN Media Group, have included cryptocurrencies as a payment method in Colombia, Argentina, and Mexico. Some of the sectors that prefer this type of financial system are hotels, IT companies, and aviation businesses. Platforms like Iconomi, Lisk, Maidsafe, Iota, and Facton are expected to grow in Latin America in 2017 and 2018.
Although it does offer certain benefits, like the possibility to decentralize a financial resource of the State and provide some security to its users, experts have shown concern regarding the increasing investment in this new technology. There a numerous reports of financial crimes and funding of terrorist organizations related to cryptocurrency platforms.
Furthermore, the system is vulnerable to social engineering and cyberterrorism, like the Wannacry attack, also a consequence of lack of knowledge and the fact that these platforms are still new for most people.
LatinAmerican Post | Juan Felipe Guerrero C.
Copy edited by Susana Cicchetto