I.T.

Cryptocurrency what it means, what it is and how to use it

Cryptocurrencies are digital currencies. The term consists of two words: crypto and currency. It is therefore a 'hidden' currency, in the sense that it is visible / usable only by knowing a specific computer code.

 

Cryptocurrency does not exist in physical form, in fact it is generated and exchanged exclusively electronically. It is therefore not possible to find cryptocurrencies in paper or metal format in circulation.

The most famous is Bitcoin, the first and most popular (for now) cryptocurrency. Even digital currencies are based on the technology of blockchain. 

The cryptocurrency can be exchanged in peer-to-peer mode (i.e. between two devices directly, without the need for intermediaries) to purchase goods and services (as if it were legal tender in all respects).

A classification in use involves the division between 'closed', 'unidirectional' and 'bidirectional' virtual currency. The difference between the three variants lies in the possibility or not of being able to exchange the cryptocurrency with legal tender currency (or 'official' currency or 'fiat currency', according to other common denominations) and in the type of goods / services that can be purchased. Bitcoin, for example, is a bi-directional virtual currency as it can be easily converted to major official currencies and vice versa.

Cryptocurrencies are obtained through mining, which is actually a series of complicated calculations solved by computers. The value naturally depends on the validity of the underlying project and the appreciation that the community will give to the project.

Cryptocurrencies and metaverse

As these are objects and digital technology, it is reasonable to think that they will be of use in digital worlds. Those digital worlds that will form the infrastructure of the Metaverse, at least in the intentions of the companies that created it.

In fact, in some of these digital worlds specific cryptocurrencies already exist, which act as an internal currency. There you can buy items to use in the world in question, such as clothing for your avatar, digital real estate, weapons and ammunition.

For example, you can dress up your avatar with digital Nike clothes. You can enter Nikeland, Nike digital environment hosted on the Roblox platform. At the moment, however, the digital environments remain separate, for example if you want to go to Decentraland or Sandbox (two other digital worlds), you can take your purchase with you.

The compatibility between the digital platforms that aspire to compose the metaverse is not yet real. This turns out to be a big problem currently, anyone who bought digital goods in one environment cannot use them in another environment.

That is, an item bought on Roblox is not transportable on the Sandbox or elsewhere. In other words, the worlds are totally closed for now.

To tackle this problem, two groups of companies were born, Oma3 e Metaverse Standard Forum, whose declared purpose is to find basic rules and paradigms to ensure interoperability between the various environments of the Metaverse.

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This is a really key aspect actually. The very existence of a shared and global Metaverse actually depends on the identification of these standards and rules.

 

Favorable to Cryptocurrencies

There are those who argue that these technologies will allow democratization in various sectors: art, finance, fashion, entertainment… That anyone will have the opportunity to create value and monetize it, regardless of their conditions of birth.

All this should lead to a redistribution of wealth, independent of place of birth, race, religion etc. 

At the same time, everyone will have the opportunity to buy financial assets and increase their capital thanks to cryptocurrencies, which are also considered a protection against inflation.

 

Skeptical of cryptocurrencies

Leaving aside the misinformed, or uninformed skeptics: those who dismiss the argument with phrases such as:

  • Only expectations created from nothing;
  • Ponzi scheme only;
  • or comment on bad news with a simple: thank goodness, so people wake up.

then there are insiders who judge exaggerated prices, quick gains or quick losses.

The important consideration is that the relatively anonymous nature of cryptocurrencies makes them attractive to criminals, who could use them for money laundering and other illegal activities. Cryptocurrencies can carry significant risks even with regard to scams.  

There are risks for consumers as there is no dedicated legislation, that can protect them in the event, for example, of economic losses due to fraudulent conduct, bankruptcy or cessation of activity of the online trading platforms. The future possibility of an immediate conversion of Bitcoin and other cryptocurrencies into official currency at market prices is also devoid of any guarantee.

 

Blockchain underpinning cryptocurrencies

Some of the main benefits of using cryptocurrencies come from the infrastructure that regulates them, the blockchain. If we register in the blockchain, the data can no longer be deleted. And since the blockchain is structured in a decentralized way on many computers, hackers cannot simultaneously assault the entire network. That's why the information saved in the blockchain i'm safe.

 

Fairer and more transparent financial systems

The financial system is centered around third parties who act as intermediaries to carry out transactions. In other words, every time you carry out a financial transaction, one or more subjects are involved who are responsible for regulating the flow of transactions. And the financial crises triggered since the early 2000s have led some to question the validity of this model. Technology blockchain and cryptocurrencies represent an alternative to this system: being able to be viewed anywhere and by anyone, they allow end users to participate more closely in the financial markets and in general also to carry out transactions without the need for intermediaries.

 

The cryptocurrency market never stops

Another advantage over banks is that cryptocurrency operations never stop. Thanks to uninterrupted mining and 24/24 transaction logging, you can buy, sell or trade tokens wherever and whenever you want. 

Ercole Palmeri: Innovation addicted

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