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Cryptocurrencies: what are they actually?

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In the past, cryptocurrencies like Bitcoin were more of an "underground story". But we have been talking about a parallel currency for two years now. In Venezuela, for example, almost everyone has a Bitcoin wallet. But what are cryptocurrencies actually?

Cryptocurrencies roughly explained

The market for cryptocurrencies is growing every day. We speak meanwhile of over 900 digital currencieswhich are all secured by cryptography. Currencies such as Bitcoin, Ethereum, Litecoin and Co. are decentralized and run on different computers, which provides additional security, as manipulation is therefore impossible.

Compared to our FIAT currencies, there is a not insignificant advantage: There is no central bank that intervenes, they are inflation-proof due to limitations and partly completely anonymous. A transaction can be carried out from sender to recipient with almost 100% anonymity - the Monero currency is an example of such a scenario.

Um Cryptocurrencies for beginners it takes several hours to explain. It is a very complex and extensive topic. If you don't deal with it for a while, you can quickly lose track of things.

What is a bitcoin?

You've probably heard of Bitcoin in the media. This is practically the "father of cryptocurrencies". It was developed together with the blockchain in 2009 - by whom? You don't know. There are rumors that Tesla and SpaceX founder Elon Musk is involved.

The decentralized currency is created using a cryptographic process (mining). Transactions are stored in a blockchain - decentralized, which means that the currency is tamper-proof and that it can be reached at any time. The value (price) of Bitcoin is defined by supply and demand.

The Bitcoin has currently with scalingprotrouble to fight. This means that transactions take hours to get from A to B, combined with enormously high transaction costs. This does not make Bitcoin worse, but less popular. As a result, platforms such as Steam have stopped accepting Bitcoin for the first time and replaced it with Litecoin. About this Proproblem to fix was that Bitcoin Lightning network Created by the community - it is not yet known when this will be available.

What is an Initial Coin Offering (ICO)?

Anyone who deals with cryptocurrencies will sooner or later come across "Initial Coin Offering" (ICO for short). This is the first issue of a new coin. If you've already traded stocks, you might notice the parallel one. In the stock market, one speaks of the Initial Public Offering (IPO) - the first issue of a share.

New altcoins (= alternative coins) are created every day and, like Bitcoin, they all have a "white paper". This provides information and background information on the future intentions of the coin. If you want to invest, you should always take a close look at it and drop by again and again. A roadmap is essential for every coin - if the coin is not updated or provided with new functions or news (new listing on the stock exchange), the coin can also become worthless.

When should you start investing?

Cryptocurrencies are a risk investment - not a money machine. You should only invest in coins if you have dealt with them properly and comprehensively. Anyone who goes blind into the market and buys any number of coins will quickly lose their capital.

Also, be careful who tells you about cryptocurrencies. At the moment there are many "Bitcoin Seminars", you shouldn't get involved. Bitcoin and the blockchain are more of a minor topic within these seminars, which are given by any team. You will be shown commercials about your lifestyle - then you will get a short and superficial introduction to this topic and then you will get a mining contract that is lucrative for the respective advertiser - but in most cases not for you.

Disclaimer: Trading cryptocurrencies is very risky. Obtaining advice from experienced people when trading cryptocurrencies is highly recommended. We are not responsible for your decisions.

This is not a paid item.

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Manual

I cover various topics - from cryptocurrencies to electric cars and digital road traffic.

Manuel has already written 9 articles and left 1 comments.

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[…] Cryptocurrencies: What are they actually?  TechnikNews [...]

Stefan

: Thanks for the great article. I've been interested in it for a long time.
In your opinion, is it worth buying Bitcoin right now?