Jordi Herrera, PhD in Mathematics and associate professor at the Department of Information and Communication Engineering at the UAB, explained in a simple and understandable way a topic as opaque and controversial as the functioning of bitcoins and blockchain.
Every cryptocurrency faces different challenges: it must not be counterfeit, no one can spend our coins, no one can spend them more than once, and no central authority can control or manipulate them.
Bitcoins were born in January 2009, created by an anonymous person or group of people under the pseudonym Satoshi Nakamoto.
They are digital currencies that do not depend on any central authority and base their security on cryptographic mechanisms and consensus.
To address the challenges mentioned by Herrera, bitcoin transactions are made through addresses, which are similar to account numbers at conventional banks, and with secret, personal, and non-transferable codes that serve as a signature.
Finally, a transaction register called blockchain is created.
The most important property of this chain of blocks is its immutability, meaning once information is included in the chain, it can never be manipulated again. However, the creation of the blockchain has an energy cost (and therefore economic).
For this system to work, the role of miners is important. These are people who, with their equipment, dedicate themselves to adding blocks to the chain. They compete against each other to create new records, but only the first one to achieve it receives a reward in the form of bitcoins. These bitcoins, which are given as rewards, come from the issuance of currency. This amount is divided by two periodically (since 96% of the currency has already been created and a maximum of 21 million bitcoins can be generated).
Bitcoins, therefore, can be obtained in different ways: working and being paid in bitcoins, directly purchasing from an exchange, or generating records for the blockchain. Its price is very variable, with many uncertainties, and it is not regulated by the stock market. However, there is one certainty: the price is always higher four years later (as this is when the amount of bitcoins issued is halved).
To conclude the presentation, Herrera appealed to common sense to avoid scams around cryptocurrencies, explaining that "there's no such thing as a free lunch" and we cannot expect profits in a short time and without risk.
Cryptocurrencies are here to stay; they connect with the sovereignty of the people and with the fact that States are losing the monopoly on currency issuance and economic control.
