Cryptocurrencies are only for gamblers, some people warn. Others believe it’s a new investor market and a different kind of money. “The term currency is not exactly accurate, because behind a currency is always a state or a central bank,” is the claim of some critics. This is not the case with Bitcoin & Co.
Independent and Immutable
Bitcoin, the first and best-known cryptocurrency, has been in circulation since 2009 in order to be able to pay cashlessly on the Internet. The technology behind Bitcoin is called Blockchain and is often referred to as a digital bank statement. The idea behind the introduction of cryptocurrencies is to make itself independent of banks, governments and regulations. So that you no longer have a job that says: This is the bank statement, that’s how much credit you have. Instead, all parties have to agree on what the bank statement looks like. Since the database of the blockchain is managed by several computers, it is considered unmanipulable and transparent.
Allthough the usage of Bitcoin initially mostly started in the field of internet poker and online slot machine gambling, it finally has started to become more and more adopted by serious companies as a means of payment in the last couple of years.
Demand Determines the Price
Meanwhile, digital money has also become a popular form of investment – with high returns and high risk. Because as fast as the prices of cryptocurrencies go up, they can fall again. “We have seen the last two years,” says a capital market expert we spoke to.
Meanwhile, there are about 3,000 such cryptocurrencies – they all work on the same principle: There is always a limited number of pieces. Demand determines the price. Limited availability made Bitcoin and its imitators a sought-after speculation asset last year. There was a hype surrounding Bitcoin in 2016 and 2017. If a Bitcoin cost 400 euros at the beginning of 2016, the exchange rate soared to more than 19,000 US dollars, today it stands at about $ 4,000.
What other Cryptocurrencies are Currently Hot?
As doubts grow about the best-known cryptocurrency bitcoin, alternatives are created daily. However, few of the many virtual currencies will survive in the opinion of the financial expert Zimmer.
- Ethereum is after Bitcoin the cryptocurrency with the second largest total value. Ethereum, like Bitcoin, is a blockchain-based technology. However, the Ethereum Blockchain not only provides the ability to receive and send payments, but also allows all decentralized applications to be handled through the Ethereum Blockchain network.
- Iota is based on open source technology and is focused on secure communication and payment between two machines. Digital networking allows household appliances and industrial machines to act independently, as it were. For example, if the domestic refrigerator registers that the milk is running short, it automatically orders it. Iota can come into play when making the payment.
- Dash offers its users special discretion. Due to a special concealment technique, the transactions in the blockchain can not be publicly tracked – a welcome advantage for many. Critics admonish that Dash attracts criminals.
- Ripple (XRP) is a payment network for banks with the aim of making international payments between them more efficient and cost-effective. It is a system that is primarily dedicated to payments between different currency areas and tries to make inefficient payment corridors efficient. That’s why Ripple is often referred to as the “bitcoin of banks”.
- Peercoin or PPCoin is a decentralized cryptocurrency and very similar to Bitcoin. Both names are an abbreviation for “peer-to-peer coin”. The PPCoin development has been running since 2012 since the cryptocurrency team discovered weaknesses in Bitcoin. As a result, concepts have been devised to address these weaknesses. The crypto coin is is supposed to be more climate-friendly than Bitcoin, since the latter needs more and more electricity in it’s mining process.
- Cardano is still relatively young and can respond very flexibly to government regulations. Especially since the topic of regulation has recently come into focus. China, Japan and South Korea in particular are now restricting their access to cryptocurrencies. But in Europe, too, they are increasingly coming into focus. That may be one of the reasons that Cardano has now risen to the top 5 cryptocurrencies.
Means Of Payment For Everyday Life?
Worldwide and nationwide, not only in metropolises, businesses now offer their customers the opportunity to pay with cryptocurrencies. But as a means of payment for everyday life, the digital money is due to the strong fluctuations in value only limited. So if you want to trade or pay with Bitcoins, it should be clear that cryptocurrencies owe their existence to the Internet and are not linked to real values. On average, the goods would be much more expensive – no matter whether it is the electric car or a pizza.
How does the Handling of Cryptocurrencies work?
You can not get bitcoins at the counter. Interested parties must first register with a crypto trading platform or online exchanges. To trade or pay for the crypto money you have to install open-source software: either a free bitcoin client or a slimmer bitcoin wallet. Even entrepreneurs who accept Bitcoins & Co., must set up such a wallet, so a digital wallet before. Which businesses and companies accept cryptocurrencies lists the Bitcoin wiki, and Coinmap.org visualizes acceptance points worldwide on a map.