What are Cryptocurrencies?
Cryptocurrencies
are a frequently discussed topic in the financial as well as in the
tech-related media. Nevertheless, digital currencies remain a mystery for
many, an issue this blog aims to change. In the next blog posts the structure
of these "new currencies" will be broken down, concepts will be
explained in a simplified manor and operations will be anatomised, for everyone
to understand.
The Key Concepts
- Cryptocurrencies are decentralised, meaning they can be used anywhere in the world.
- Cryptocurrencies are used via the Internet, making an Internet access the only requirement necessary for their usage.
- Benefits: low usage fees, worldwide access, accounts cannot be controlled externally (no one can freeze your account), no basic requirements or limits.
- The currencies and transactions are provided through a process called mining. Through an application (e.g. Genesis Mining) users provide the computing power of their devices in return for cryptocurrencies.
- The total amount of the respective currency is kept limited by simply adjusting the computing power required for mining new amounts of the currency. If a large amount of the currency is required, less computing power will be required and vice versa.
- Cryptocurrencies can be exchanged for real currencies on several online market places (e.g. BitPanda or CoinsBank) and are stored in an online bank account there.
- Nowadays cryptocurrencies are accepted in more and more stores online as well as offline and can be used to acquire all kinds of products.
The video that can be found below briefly explains the above mentioned key concepts of cryptocurrencies using the example of their most popular representative: The Bitcoin.
