Crypto Trading Was Ist Das

Crypto trading was ist das

What is Cryptocurrency?

Cryptocurrency (Cryptographic Currency) is the term used to describe digital currencies which utilizes Cryptography to secure their payment networks and transactions.

The term ‘Cryptography’ is a derivative of two Greek words ‘Kryptos’ and ‘Graphein’, which literally translates into ‘Secret’ and ‘Writings’.

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The process of encrypting words and numbers has continued for thousands of years and today, the process is often done digitally.

Any digital currency with a blockchain – a public ledger which records all transactions publicly – which uses* ‘cryptography’* to encrypt recordings can be referred to as Cryptocurrency. Bitcoin, Ethereum, Litecoin, Dash, Monero, Ripple, Steem all fall under the category of cryptocurrencies.

Many get confused between what a digital currency is and what a cryptocurrency is… to be it simple, all cryptocurrencies fall under the category of digital currency.

Crypto trading was ist das

PayPal, virtual game money, and even loyalty points on a platform can be considered as a digital currency. Think of digital currency as the main category and cryptocurrency as the child (sub-category) of digital currency.

All cryptocurrencies utilize what’s known as the ‘blockchain’. It is a network of various different computers working together to record and confirm transactions.

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To put it simple, think of it as a ‘magic book’ in which few thousands of people have. This ‘magic book’, once edited, requires everyone who has the book to ‘confirm’ these changes so that the ‘edit’ can be verified.

Crypto trading was ist das

In the case of cryptocurrencies, this ‘edit’ is ‘transactions’.

Because it is a peer-to-peer collaborative network, the transactions are also strictly peer-to-peer.

Hence, the reason why most cryptocurrencies do not have a ‘central authority’ which governs and controls the currencies.

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Hence, the reason why cryptocurrencies are deemed as the most democratic currencies we currently have.

There are over 800 different cryptocurrencies currently available on the market (according to Coin Market Cap: a platform where cryptocurrencies are ranked based on their total market volume). Certainly, Bitcoin is the most popular amongst these currencies as it is the pioneer, the first ever cryptocurrency to be created.

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This is followed by Ethereum, Ripple, and so on.

If you are looking for an instant, secure, democratic, and truly global payment method which takes little to no transaction fees, do learn more about cryptocurrencies and how to use them!

Under the hood

Crypto assets work exclusively on the internet by using a network of computers that lend their processing power to verify and register all the transactions made. In return for their work, computers are rewarded with a payment in the form of tokens.

Crypto trading was ist das

The system that allows for this to happen is known as the blockchain, and it is the fundamental force behind any crypto asset.

Sunny Kin and Scott Nadal talked about how the blockchain keeps everything secure and public in their paper, PPCoin: Peer-to-Peer Crypto-Currency with Proof-of-Stake. The two men explain that the blockchain form by blocks and each block is a segment of the chain that holds the register of any transaction made with crypto assets.

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It is then reviewed and stored in the system which allows for more blocks to be found and used. It is this process that allows for privacy and security to be maintained at all times.

It all has a purpose

The usefulness of cryptocurrency can be defined by the term that began this article, asset.

Crypto trading was ist das

Unlike tender or fiat money, crypto coins are not subject to depreciation by inflation. They are less related to forex and more comparable to gold. That means that they can increase in value as demand for it increase.

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However, unlike gold, cryptocurrency can also be used to pay for goods and services.

Jerry Brito and Andrea Castillo argued in the 2013 paper, Bitcoin: A Primer for Policymakers that it is the duality of crypto assets (as a place to store of value and as means of payment) what has driven its popularity. The decentralisation of the economy along with avoidance of taxes, inflation, and local incertitude, implies that anyone can save their money in tokens and withdraw it when the local economy improves.

Crypto trading was ist das

That is why crypto assets is the latest craze in Wall Street.

References:

» https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3024330
» http://www.economist.com/sites/default/files/the_future_of_cryptocurrency.pdf
» https://www.mercatus.org/system/files/Brito_BitcoinPrimer.pdf
» https://decred.org/research/king2012.pdf