Erste Schritte: Was sind die Grundbausteine von Kryptowährungen?

If you’re thinking about getting into cryptocurrencies , have recently invested, or if it’s been a while and you have an excellent memory, you may remember the feeling of overwhelming confusion, mystery, and bewilderment that arose. A thought along the lines of “crypto certainly plays into the cryptic nature of digital finance “ may have crossed your mind. If this was the case, and your thoughts became foggy and your brows furrowed as you tried to come to terms with the melting pot of technology, finance, and incomprehension, you’re not alone.

Diving into the dark deep end of Bitcoin blockchain and unregulated banking could feel pretty overwhelming if you don’t have the right life jacket to help you take the leap. Or worse, the wrong life jacket in the form of “support” from people who like to think they understand something when they don’t have the slightest idea what the difference is between a crypto hard fork and the cutlery on the dinner table.

Online resources are certainly helpful, but without an iota of knowledge of the basics and trying to navigate the technologically-driven terms, the layman might as well pack his bag and go home, leaving his paper wallet behind.

But if Layman had packed his bags, we wouldn’t have the complex nexus of innovative excitement that comes with cryptocurrency. (Perhaps I’m also thinking of Satoshi Nakamoto, but since we don’t know the name of the Bitcoin creator, we could guess that he calls himself Layman and be right about that)

Satoshi Nakamoto and his enigmatic presence brought us Bitcoin and led us down the rabbit hole of cryptocurrency.

It’s adoption, it’s what’s happening in the market, it’s technology, politics and finance, all wrapped up in a complicated bundle of innovations that we can choose to pursue or forgo.

If we take the price of Bitcoin as an example – it has risen and fallen more times than a five-year-old learning to ride a bike, but through the ups and downs, the one thing that has consistently increased is the interest people have in it. And that constant must be for a reason. The concept of decentralized money – a currency without governments and taxes and hidden fees – has sparked an interest that has grown into a roaring industry.

If we look at the statistics, cryptocurrency has received more attention than Oprah Winfrey in the last year. Initial coin offerings – a method by which cryptocurrency startups can raise funds similar to public offerings – have raised a whopping $5.6 billion. That’s billions invested in projects based on an idea that isn’t even a decade old.

Not only is there interest, there is also optimism. Google Trends shows that the question “what is Bitcoin” is researched far more worldwide than the question “will Bitcoin fail”. Interest is piqued, and it’s not just the bank accounts that prove it.

Whether it’s a bubble – as many have called it – a gamble or an outright scam, it’s here now and it’s a hot topic and for that reason alone, it might be worth knowing a little about the innovation that’s evolving into more than just a blip in the pond, but a new wave with potential.

So what do you do if you are new to it and know nothing about it?

From experience, anyone who dabbles in something new can tell you that it’s like building with blocks; it’s a process. You learn one thing, with the headaches and the victories, and then you learn more. There are so many facets to cryptocurrency that it would be impossible to outline them in one piece of white paper. But with each new aspect, comes a new opportunity.

Opportunities like stumbling upon more than two people’s “new favorite rap artist” or marveling at the ludicrous amounts of money sitting unsolved in an artistic, cryptocurrency-inspired puzzle.

We’ll take you through what we think are the three most important fundamentals of cryptocurrency.

Building block number one – Money Talks:

Cryptocurrency is focused on money. It’s about finance and that’s right in the title. Cryptocurrency has been called the next step in the evolution of money and luckily you don’t have to be Warren Buffet to understand that.

In the modern world, there are no currencies – digital or national – that have any real inherent value. Value is controlled by how readily a merchant accepts the currency as payment to conduct transactions. Bitcoin and most cryptocurrencies meet the properties needed to function as money, but with the added benefit of doing so better than most traditional currencies. Aided by the fact that it relies on mathematical proof as its foundation, cryptocurrency on blockchain technology offers the outstanding feature of being a means of payment without the headaches of a bank.

This brings us to…

Building block number two – technology is important:

Cryptocurrency works on the groundbreaking technology that is blockchain.

Blocked brain?

No. Blockchain. It is a database that exists on many computers and is used by many users simultaneously. As new records, or “blocks,” are added to the database, it grows. Each new block connects to the previous block, forming a chain. When people talk about cryptocurrencies being “decentralized,” they mean that the database is not controlled by a single body, central bank, or government. Instead of one entity managing the chain, everyone involved in the network gets a copy of the entire database. Each new block is added to the ledger through an irreversible process and builds on the old blocks, which remain forever. This makes the chain impossible to tamper with, and fake documents, false transactions, and other fake information have no chance of getting into the blocks.

But if everyone has a copy, does that mean everyone has access to my money? Good question! And thankfully not. All blocks are encrypted in a unique computerized pattern, so even though everyone has access to all the “information,” it is so complex that it would be impossible to try to decrypt the database. Instead, each user who adds a new record to a given chain has their own unique cryptographic key. If the key remains private to you, no one else has the ability to tamper with any of your transactions.

This gives us a process that is independent (decentralized), transparent (everyone has access to the records) and secure (only you have access to your money). The advantages of this process are obvious. It is less risky, the data is reliable and hidden transactions are crystal clear. It sounds like an idea that everyone should jump on.

But not all parties agree with this, and so we find the issues…

Building block number three – politics:

Aside from cryptocurrency prices, this is one of the most volatile aspects of digital currencies.

Citizens either love it or hate it, or can’t decide which side of the fence they want to sit on. News of governments of countries adopting cryptocurrency into laws or banning its legal use is common. It’s a new idea and the benefits – or abuses – are still unclear, so it only makes sense that authorities aren’t quite ready to embrace everything blockchain-related. It makes even more sense that banks are unhappy about the idea of ​​legal decentralized money.

This is one part of cryptocurrency that is constantly changing no matter where you are. If cryptocurrency prices start to stabilize, we could see this aspect follow suit. For now, however, we can only speculate on how national governments might act.

One thing we can be sure of, however, is that…

Building block number four – your choice

…is entirely up to you.