The cryptocurrencies, And one of all Bitcoins, they are completely digital currencies that base their functioning on cryptographic models, such as that of the blockchain. For some years now they have been the protagonists of the financial scene worldwide especially for their extreme volatility that often leads them to have market values that grow (or decrease) at high speeds. Consider, for example, that a Bitcoin It is about 80 thousand euros to date, while exactly one year it goes he had a value of 60 thousand euros.
Let’s see in this article that what they are cryptocurrencies – or crypt – what theirs is scope and what are the risks of their use.
What are cryptocurrencies
Cryptocurrencies – also called crypto For simplicity – they are currencies precisely but, unlike euros, dollars or any other traditional currency, exist only in digital format. Their name, crypt-value, suggests a key concept of their functioning: they are currencies whose function is based on encryption: “crypt”, from the Greek “Kryptos“, It means to hide, and in fact the encryption is that branch of mathematics that studies and develops techniques to hide the messages, or rather, to make them visible only for those who have the right reading key, so as to make the data safe. We often feel the term bitcoin, but it should not be confused with the term cryptocurrency, they are not synonymous: while cryptocurrency is the type of digital currency to be contrary to those Traditional, bitcoins are a type of cryptic, a bit as if they were the euros.
True, traditional currencies also exist in digital format since credit cards exist, but between traditional currencies and cryptocurrencies there is a huge difference. In traditional currencies behind each transaction there are banks And governments which ensure the system, they do guarantee. This does not happen in the crypts, it is said that the system is decentralized.
The decentralization of cryptocurrencies
In the traditional system Each transaction we do is automatically marked by bank On our bank account – that is, on the database of the bank where our data are written. The bank ensures that we truly exist, that the transactions that we perform or receive are lawful, authentic And safe And that even if we do not always have banknotes or coins with us, we have that value, it exists and is deposited safe somewhere. So we can use it.
In the case of crypto Not only is the physical currency – it is only one digital currency – But there are not even the databases of the various banks on which customer data are written. In their place there is a currency database, that is, a single huge register in which all the transactions of those who own, buy or sell that specific crypt are written.
For example, whenever Bitcoin transactions are performed, they are written on the general Bitcoin register which is public and which contains the transactions of all existing bitcoins.
The register And unique for each crypto, but they exist thousands Of identical copies Consultable by anyone, who are updated simultaneously every time a transaction is made. To this case, the encryption that regulates the registers. Let’s see what it means.
How the registers work: encryption and blockchain
Crypt transactions are made safe and reliable using encryption. The most common methodology is that of Blockchain, that we will try to explain to you here in a few words.
The blockchain works a Transactions blocks which are linked together in the right order and made sure through the encryption from the so -called miners (or in Italian, miners). Each miner has one copy of the register of a specific crypt and thanks to its computer system and a great calculation power, generates transactions and assure.
But while in the banks whoever writes is also the Guarantor, here the Miners can be considered more than the “workers” who follow the cryptographic rules and fill in the registers: The real guarantor is own encryption.
We understood how transactions work, but how do he use the crypts, are real money?
Cryptocurrencies are not “real money”
Crypts are not moneyor at least not as we understand it. From an economic point of view, the physical coin It has three functions:
- Be a means of payment with which to buy goods. And this cannot be done with the crypts: they have no legal course in any state of the planet. However, there are activities that accept crypts as payment but do so on a voluntary basis.
- Be one reserve of value which can be accumulated over time. This is basically the evolution that has been from barter to money.
This point is a little complex because crypts cannot be used to buy, but they actually accumulate and that’s it. So in a sense they are a reserve of value, but still a value that is not a means of payment. - Be aaccount unitwith which to measure the value of things, our purchasing power. For example, if I have two euros I know that – to date – surely I can buy a bottle of water, or a coffee or a little bread. In short, it is a measure of goods and services.
And this also does not work very well with crypts, whose fundamental feature is volatility: they have a value that flows very quickly, even after minutes.
So even if when in 2009 the cryptocurrency – with the bitcoins that were the first – the intent was to create a completely digitized currency, but in any case with the currency value, in truth the crypts more than a coin resemble one financial instrument. In the sense that those who buy Bitcoin, Ethereum, Solana, or any other crypt, does it with speculative end, that is, with the hope that the value of one’s crypts climb over time, so as to sell them at a price greater than that of purchase and draw a I earn.
This last aspect, the volatility, It can lead to sudden earnings, but it can also mean sudden losses. From which, the doubts: how sure they are?
The risks of cryptocurrencies: from safety to scams
One of the greater risks of the crypts is theirs volatility. For example, in these weeks – March 2025 – the value of crypts is collapsing leading to losses for those who own them.
There are many who fear the crypt scams. But here there is an important consideration: the cryptographic scheme of blockchain has a very high level Of safety: If someone wants to care about money, he must be able to enter a block and then encrypt information. This is not at all simple: it is not enough to tamper a current account, therefore a single database, but all the public copies of the register of specific crypt that must always be the same and consistent with each other.
However, it is true that many scammers pay each other in crypt. This is because one of the problems of the crypts is the Tracking difficulty: Although all transactions are in the light of the sun, public and consulted by everyone and therefore traced, for reasons of privacy (since all public) the identity of those who do the transactions is codified. Is the so -called pseudonominated. This allows you to maintain privacy, but also allows scammers to hide their real identity.
In short, one of the great problems of the crypts is the recycling Of dirty money because once the dirty money has entered the crypt world, it is difficult to keep track of it. However, for criminals, the moment of transition between normal currency and cryptocurrency remains insidious, because in any case the crypts must be bought with traditional money.
