Blockchain and cryptocurrencies

[garfield]

Hello:

Well, since I keep reading and still can't quite get the hang of it, I'm going to see if what I've understood is correct:
cryptocurrencies are generated by blocks that graphics create at the request of a program. I suppose that these blocks are something like generating RSA or PGP keys. These keys are used to be able to encrypt transactions that are made on the internet. The price of cryptocurrencies is based on the blocks that you are able to generate. These chains are public and private at the same time.
What I don't understand is:
- Who gives value to cryptocurrencies? They are not based on any pattern. The one who creates the cryptocurrency receives the blockchain, which in turn sells it to a bank, for example, but receives a real amount that can be spent. Not being under the umbrella of any regulatory mechanism, he is the bank and decides how much it costs, the difficulty of creating them and if he wants to close, he closes. Yes, banks work this way, and from there the corralitos in various parts of the world, but there is always someone watching.

• The robberies: every time I look at pages I see that they have stolen a brutal amount of cryptocurrencies from someone, and that no one takes charge. On top of that, you put your cryptocurrencies in a virtual wallet (which works like a bank) and everyone washes their hands. Banks have to guarantee their deposits, and send money to the central bank to protect it, apart from insurance.

And yes, I know it's the same as the financial system we have now, but the currencies based their value on the gold standard (although I think that's not the case now), but that something fructue so much in such a short time I don't think is neither interesting, nor normal.

[Fassou]

Financial bubbles are like that, you can understand how they work but don't expect them to make much sense in the end ;D. If you take advantage of them you can make money, and in these, unlike what usually happens in others, it's not an investment of capital from which you later get a profit or loss, but it's work converted into speculative currency. The thing about thefts, it's intrinsic to the Internet, and more in something that rivals traditional financial systems, who are interested in seeing it as an unreliable option. If you have extra cash, and you want to invest in mining equipment, go ahead, but like in the stock market, it's better to use the money "that you have left over" because no one guarantees that you will recover the investment, although you might be able to end up selling the equipment . P.D.: All this, written from the most absolute ignorance .

[Sylver]

From my humble ignorance, I understand that cryptocurrencies are all decentralized, that is, there is no one who "manipulates" or "controls" their value or their availability as happens with traditional currencies. The value of cryptocurrencies is marked by the use and extension they have on the network, that is, the more practical uses a cryptocurrency has, the greater its use will be and consequently its price will increase.
Another factor is investment; if a sufficiently large group of users wants to use a cryptocurrency as an investment fund style stock exchange, surely by buying it massively they will contribute to its quotation increasing and a bubble will be created. That is what everyone plays for every day, but most investors I have met in this world always make their investments based on the expansion potential of cryptocurrencies (increase of websites that accept them, practical utility, ambition of the base project, etc).

Greetings!

[oscarbui]

I also comment as an absolute ignoramus. One day, on a TV show I watch on the internet, an expert on the subject was interviewed and gave an example of how this type of currency works, which at least for me, clarified things quite a bit while also showing how irrational and "crazy" it is at its core. The example, I believe it was a real case from a few years ago, was based on a man who offered 10,000 Bitcoins to anyone who brought a pizza to his house, and someone did; there someone had already given a value to that amount of bitcoins, then as more people go on to trust the currency, it will have more value. It is really strange that a "currency" that "appears out of nowhere" can have any value, the fact is that the gold standard, as you rightly say, is no longer used, now the FIAT system works, which is basically the same thing: fictitious money.