In any case, you should exercise caution and, if you are interested, be well informed, as there are also reports of lure offers that use the hype for fraudulent purposes. With the advancement of digitalization and ever newer technologies, it is not surprising that finance will sooner or later take advantage of the further development and application possibilities of blockchain. But what exactly are cryptocurrencies and can they replace regular currencies? Let's take a closer look.
What is called digital currency ?
The first digital coin is Bitcoin, which was developed by Satoshi Nakamoto in 2007 and has been actively used since 2009. The basis of these new coins is blockchain technology, which allows documents and information to be stored in data blocks using hash values and timestamps.
The blockchain itself is not that new, as its developers Stuart Haber and W. Scott Stornetta got the system going back in 1991. However, with the emergence of digital coins, this concept became more important.
Compared to the regular global FIAT currencies such as the euro, dollar or yen, cryptocurrencies represent an alternative, self-sufficient and decentralized payment system. Financial institutions and governments initially have no influence on value development and trading. All transactions are irrevocably stored on the blockchain.
How to cryptocurrencies ?
The success of Bitcoin led to the activation of many other cryptocurrencies. There are currently more than 10,000 digital coins , with the most successful being Bitcoin, Litecoin, Ethereum and Ripple.
In order to buy Bitcoins , those interested must first create a digital wallet. This is usually completed within a few minutes, similar to other digital financial services providers such as Paypal or Neteller. It is important to carry out prior research and it is worth comparing the providers in detail and reading reviews can also be beneficial. This way you can get a realistic impression of the current options and make a sensible decision. As with all offers - especially online - if it sounds too good to be true, it usually isn't.
If you have decided to open a wallet, regular money such as euros, dollars or another FIAT currency can be deposited into this wallet, which is linked to a trading exchange, in order to start trading on one of the crypto exchanges. Some banks already offer checking accounts that can be linked to a digital wallet to purchase Bitcoin or other cryptocurrencies.
Once there is money in the wallet, you can buy. All you need is your wallet pin and the appropriate email address. Personal information such as name or bank details are not necessary.
Which crypto exchanges are there?
Around 10% of Germans now trade or . In South Africa this percentage even rises to 22%. The top crypto exchanges are Binance, Kraken, eToro and Coinbase. Each exchange offers different modalities and focuses on a specific target group. While eToro, for example, makes it very easy for beginners, other platforms allow professional investors and stock market traders to take full advantage.
It is advisable to obtain detailed information about the individual trading platforms before purchasing your first coin.
What are the advantages of cryptocurrencies?
- Option for very high returns
Trading digital coins does involve a certain amount of risk. The price can rise enormously within a very short period of time, but it can also fall extremely. However, if the investment risk is high, there is always the chance of achieving very high returns. For example, since its activation in 2009, Bitcoin has continuously increased in value, although the price has experienced many fluctuations.
- Very secure blockchain
A particularly important factor these days is cyber security. All transactions and trading actions are irrevocably saved in a block. Each information block builds on the previous one and passes recognition data to the next one. Manipulation of a block is therefore virtually impossible.
- Absolute transparency
All transactions can be viewed by anyone. The system is decentralized. As a result, there is no single body that monitors all data. The data is distributed on servers worldwide. This decentralization also supports security and freedom from manipulation.
Further advantages include trading 24/7. The stock exchanges are practically never closed. In addition, the digital coins can also be used to prevent inflation of FIAT currencies .
The money of the future?
Digital coins are definitely an interesting option for money trading in the future. You can buy and sell across countries and currencies at lightning speed. The system promises a high level of security. However, the very volatile prices could cloud the many positive properties if plans are made to increasingly integrate digital coins into everyday life.
Notes:
1) This content reflects the current state of affairs at the time of publication. The reproduction of individual images, screenshots, embeds or video sequences serves to discuss the topic. 2) Individual contributions were created through the use of machine assistance and were carefully checked by the Mimikama editorial team before publication. ( Reason )