Which crypto currency was first publicly traded?
Bitcoin is probably the best known of the over 3,000 existing cryptocurrencies. How do they actually work?
Before there were coins, we exchanged goods with one another. Then gold and silver established themselves and today we pay with cash or cards. The question is how we will probably pay for our coffee to go in the future: With crypto money, for example? After all, there are already over 3,000 cryptocurrencies, of which Bitcoin is certainly the most famous. But what is it about digital means of payment? We have compiled the most important facts about Bitcoin and Co. for you.
How it all started
After the financial crisis in 2008, many people no longer had confidence in the banks, but neither did they want to simply store their money under their mattresses. It is therefore not surprising that the concept paper on Bitcoin was published in the same year - the first and currently the most valuable cryptocurrency. Satoshi Nakamoto published the white paper on a mailing list on cryptography. However, it is still not known whether it is the real name of the Bitcoin founder or a pseudonym. In any case, only one year later, Bitcoin, the first crypto currency, was publicly traded.
What are cryptocurrencies?
The word kryptos comes from the Greek and means hidden. Quite apt when you consider that cryptocurrencies exist exclusively digitally and are not regulated by any bank. The special thing is that private individuals generate and manage digital means of payment. Of course, this does not happen in an uncontrolled manner and the technology on which the crypto money is based is more secure than conventional encryption. If you want to convince yourself of this, you can take a look at the programming code of Bitcoin, because it can be viewed free of charge as open source. Incidentally, it also says that Bitcoin is limited to 21 million. So nothing more may be “produced”.
What is the value of digital means of payment based on?
Behind currencies such as the euro or the dollar are values that in turn determine the rate. It used to be gold, but today banks and states guarantee the intrinsic value of currencies. In contrast to the cryptocurrencies, because here the value is measured by the use value. In other words: the equivalent of digital means of payment is the trust users have in the control function of a shared network. And that in turn is based on so-called blockchain technology.
What is the blockchain?
All transactions all over the world - i.e. every transfer of crypto money from person A to person B - are encrypted and stored decentrally. This information is combined into data blocks using complicated arithmetic tasks. This is where the miners come in. They are members of the decentralized network and are responsible for the creation and validation of transactions. In order for a transaction to be released, the miners must first create the corresponding block. Since a lot of computing power is required here, several miners usually work on one block. But only those who manage to crack the task receive a monetary reward. Since the participants combine their computers into a network, it is particularly difficult to manipulate data. Because to do this, the intruder would have to hack all computers on the network.
What are the advantages of cryptocurrency?
Which brings us to the advantages: Thanks to the decentralized network, crypto money is not only available all over the world, the transactions are also significantly faster and often free. In addition, the digital means of payment are not with the banks, but are stored on anonymous wallets. Only the user has access to this digital wallet, which is why there are no restrictions imposed by higher authorities. Citizens in crisis areas in particular could benefit from securing their reserves in this way because the state does not have access to the wallet.
Disadvantages and criticism of the digital means of payment
As great as the popularity of cryptocurrencies is, the criticism is just as great. Many states fear about their influence on the means of payment and are therefore planning their own state e-money. In addition, experts believe that the value of cryptocurrencies is being artificially increased. This in turn leads to a bubble that sooner or later bursts. For some users, this could even mean a total loss. The basic idea of anonymous payment is also shaky. Because precisely because of this, there is a threat of abuse such as money laundering or tax fraud.
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