What are cryptocurrencies?

Cryptocurrencies are currently experiencing social recognition that would have been unthinkable for a long time. Long associated only with the Darknet and illegal Internet transactions, what happens to many from the beginning is cryptocurrency as a digital alternative to fiat money.

What are cryptocurrencies?

Cryptocurrencies are digital forms of payment. With the intention of creating a secure payment system, they are secured by cryptographically secured protocols, ie by means of encryption.

Because the currency units are generated in agreement with the corresponding community in a fixed number, they can not be generated and multiplied as often as desired and are thus - unlike fiat money - inflation-proof.

There are currently over 3000 different cryptocurrencies. The first and best known is Bitcoin, which was developed on the basis of a whitepaper by Satoshi Nakamoto and has been trading since 2009.

In response to the 2008 financial crisis, he came up with the idea of ​​creating an alternative financial system independent of states and banks.

How do cryptocurrencies work?

The underlying technology behind cryptocurrencies and the corresponding payment system is the blockchain , which makes the system very difficult to manipulate.

Payment transactions are characteristically cashless and independent of a third instance, ie a banking system. Neither the framework conditions of transactions nor their implementation are thus under institutional control.

Another feature of cryptocurrencies is the anonymity with which transactions can be made. Since no data is exchanged between transmitter and receiver, this is always guaranteed.

Cryptocurrencies are generated by so-called miners . These are mathematically encrypted digital currencies that are mathematically calculated using powerful computers.

These always have a defined maximum number of "hashes", which means that only a certain amount of the currency can be in circulation at any one time.

Each of these digital coins is a virtual code associated with a monetary value.

Payment services that support crypto currencies include Bitfinex or Coinbase.

Source of info cryptomonday.de.