Cryptocurrencies

2. In 2008, a person or group of people published the whitepaper for Bitcoin under the pseudonym Satoshi Nakamoto , thus paving the way for cryptocurrencies. To date, it is not clear who is behind this pseudonym and, consequently, behind the idea of ​​this revolutionary digital payment tool. Furthermore, for many it is still not clear what exactly a cryptocurrency is, despite the fact that about a decade after the appearance of Bitcoin there are over 2,000 different suppliers of these digital payment systems, as evidenced by the list of the CoinMarketCap web portal . Content 1.What is a cryptocurrency? 2.Main features of a cryptocurrency 3.What are cryptocurrencies used for? 4.How exactly does payment with a cryptocurrency work? 5.How do you invest in a cryptocurrency? 6.What cryptocurrencies exist? 7.In summary: Advantages and risks of cryptocurrencies at a glance

3. What is a cryptocurrency? A cryptocurrency (also crypto money) is a digital means of payment typically based on blockchain technology and cryptographic procedures such as hash functions and digital signatures . Unlike classic currencies, cryptocurrencies do not involve coins or banknotes, as all payment units are exclusively digital. These usually asymmetrically encrypted currency units are collectively generated across the entire system and, in most cases, when a cryptocurrency is launched, a defined number of units is established.. The concept of "mining" for the process of generating units has become widespread, and this explains why we often hear about "cryptocurrency mining". Most cryptosystems are based on a decentralized structure : not only the generation of new currency units but also the individual operations are typically performed in a collective mode, where multiple participants control and countersign them on the respective system. Communication usually takes place via a peer-to-peer network where all computers have the same rights. Unlike central bank money, classic cryptocurrencies do not have a "Single Point of Failure" , therefore they do not have single instances on the network, whose functionality or whose action could endanger or dominate the currency system. An exception are cryptocurrencies such as Ripple , managed by private companies that claim a large part of the production of units and distribute it according to their own rules.

4. Main features of a cryptocurrency Following the Bolívar Fuerte hyperinflation on August 20, 2018, Venezuela not only introduced the new Bolívar Soberano currency, but also linked it to the Petro cryptosystem . Even if the Venezuelan government speaks of the "first state cryptocurrency", the Petro lacks, precisely due to state regulation, the decisive characteristics of a currency, such as the decentralization of the system or the equality of rights among all participants . Similarly controversial are the privately managed systems already mentioned, such as Ripple. Looking more precisely at the three elementary components of a cryptocurrency, the systems managed by private companies and the state satisfy the "crypto" aspect but do not have much to do with the classic Bitcoin principle. Encryption Cryptography not only gives the name, it is also the decisive discipline for the security of cryptocurrencies. Behind the concept of "cryptography" lies the science that deals with the encryption and general protection of data and information. Both are indispensable for a cashless and fully digital payment system, which should basically work without a central and regulatory body. Two cryptographic procedures are mainly used in cryptocurrencies: •hash functions •digital signatures Hash functions are the basic piece of the puzzle for verifying data integrity and encoding participant account addresses and operations. Furthermore, they form the basis of blockchain and block mining. Digital signatures allow you to prove the status of encrypted information without exposing it. This possibility is also used to protect the content of e-mails . In cryptocurrencies, this technology is ideal for signing transactions and communicating approval of a transaction to the network.

5. Blockchain The blockchain is the decentralized ledger of a cryptocurrency, where all operations are listed in the form of blocks. The registration of the individual blocks takes place without gaps and in chronological order so that, over time, a verifiable , mostly open and lasting registration results . Administration is up to the participants of the core peer-to-peer network, who follow a defined protocol to validate new operations. Consequently, all nodes automatically download an integral copy of the blockchain which makes a central instance superfluous for viewing the operations that have taken place. A blockchain-based data record is not editable without the approval of the other members. Block mining The third important column of cryptocurrencies is the so-called block mining. This is the process required to add new operations to the cryptosystem in the form of blocks in the blockchain . Mining requires specific software, capable of solving mathematical questions and therefore also the hash functions at the base. All network participants can work to find the solution to the respective mathematical problem posed to validate a new transaction block. In this case we also speak of proof of work ("proof of work"), to be provided. If a block is successfully extracted and the result of the hash function is guaranteed, all participants can verify that the solution is correct.

6. What are cryptocurrencies used for? The fact that cryptocurrencies are also called crypto moneyit is no coincidence: the similarity with real currencies that include banknotes and coins and the fact that representatives such as Bitcon or other influential alternatives , such as Ethereum, IOTA or Monero , have a counter value (demand and users), have led to consider the digital currency systems as possible means of payment for the future . In particular, Bitcoin is already used in this sense, as various online sales platforms, such as Expedia , have started accepting payments via cryptocurrencies. However, the first of the cryptocurrencies has not yet established itself as a means of payment, which is mainly due to its highly fluctuating value. How exactly does payment with a cryptocurrency work? If the units of a cryptocurrency have a certain value , which can be converted into central bank currencies such as the euro, the prerequisite for use as a means of payment is essentially satisfied. But in order to actually pay with digital money, the seller must also accept the respective cryptocurrency as a means of payment. A key pair , consisting of a public and a private key , is required for payment execution . The public key is visible to everyone and has the same function as a bank account number: it serves as the starting address from which a user initiates a payment with the respective cryptocurrency. The private key, on the other hand, is used to verify the operation and is therefore comparable to a password or a TAN. Only the owner of the respective cryptocurrency can see the key used to initial the operation. Finally, the wallet , as the virtual wallet in cryptocurrency is called, is generally automatic. When paying, users only need to enter the sum and the destination address , ie the payee's public key.

7. How do you invest in a cryptocurrency? Cryptocurrencies are a highly coveted speculative object after the Bitcoin price boom in 2017. The interest in investing in the crypto money sector has quickly risen significantly, although there are various approaches to investing in any of the currencies available on the market. market. As for the currency market, crypto money can also be used as an exchange commodity , where the classic price fluctuations are exploited to multiply one's capital. The difference is that there are no central banks, financial controls, or state regulators for cryptocurrency to monitor and intervene when the market heats up. Purchase, sale and exchange of currency units of the different cryptosystems arrive on trading platforms such as AnycoinDirect.eu or Bitcoin.de , which also feature the most recent courses. Alternatively, you can invest indirectly in cryptocurrencies via the stock exchange, by betting on price fluctuations or by purchasing company shares. active in the cryptocurrency sector. What cryptocurrencies exist? Considering the fact that there are over 2,000 different cryptocurrencies around the world , it is not surprising that even the expertsknow all suppliers and their models. Those wishing to invest in crypto money therefore have no other option than to intensively observe the market in search of suitable solutions. Particularly for newer or lesser- known currencies, there is always the risk of falling victim to fraud or that the whole system will collapse. The following list presents some of the established cryptocurrencies, which are distinguished by a high market capitalization , therefore by a relatively high sum of shares in circulation:

8. Cryptocurrency Abbreviation Description Bitcoin BTC Bitcoin, released in 2009, is not only the forerunner of cryptocurrencies, but is also the most important digital currency still today, with the highest value in Dollars, Euros, etc. By the end of 2018, more than 17.4 million of the maximum 21 million had already been put into circulation, rarely used for payments but mainly for investments. Bitcoin Cash BCH Bitcoin Cash is a Forkof Bitcoin, born in 2018, preceded by a multi-year discussion within the Bitcoin community. The reason for the dispute was the block size limit of 1MB and therefore the low transaction rate of Bitcoin (around 7 per second). Bitcoin Cash currently allows a limit of 32MB, which makes 130 trades per second possible. Ripple XRP Ripple is not a classic cryptocurrency either, but more a universal exchange platform for currencies

9. Cryptocurrency Abbreviation Description Ethereum ETH The Ethereum cryptocurrency, whose currency units are defined Ether, has been officially used since 2015. Digital payments play a secondary role in the system developed by Vitalik Buterin: the focus is mainly based on the possibility of concluding Smart Contracts (i.e. commercial contracts) without intermediaries. These are usable in the form of code scripts in the Ethereum blockchain. Monero XMR Monero attaches great importance to user anonymity, guaranteed by features such as hidden addresses or group signatures. The CryptoNight algorithm employed aims to prevent mining using ASICs (specific mining hardware), while the developers aim to force the mining process with commercially available PCs. This results in a constant adaptation of the mining difficulty to keep the block generation speed constant.

10. In summary: Advantages and risks of cryptocurrencies at a glance Cryptocurrencies offer decisive possibilities and chances that classic currencies lack. In particular, blockchain technology has so far convinced across the board, and it is therefore no coincidence that it has been adopted in numerous projects outside the financial sector. The abandonment of a central regulatory unit, firmly anchored in most cryptosystems, is also a promising approach. The resulting freedom to regulate the market is, however, also one of the major problems: also due to the lack of a concrete equivalent value, the prices of crypto money are subject to strong fluctuations, with the constant risk of a total collapse of the system. Advantages and disadvantages of cryptocurrencies compared to general monetary or currency systems at a glance: If you want to understand more about Cryptocurrencies use this E book Advantages of cryptocurrencies Disadvantages of cryptocurrencies anonymity strong fluctuations in value quick operations potential speculative bubbles simple application possible hacker attacks worldwide availability (beyond state borders) no access to the account after the loss of the access key no limitation of the operation limit exclusively virtual money free from the influence of banks no loss insurance blockchain technology