Everyone is talking about Bitcoin. But how exactly does the cryptocurrency work and what should be considered when making transactions?
Bitcoin is the most famous cryptocurrency. What exactly is a Bitcoin technologically speaking?
Bitcoin was the first cryptocurrency that ever existed, it was designed in 2008 and launched in January 2009. The idea behind it was to create a decentralized currency that only exists digitally and is not linked to a central bank. 2008 was the economic crisis and many people had lost faith in fiat money. The idea of an alternative arose. Bitcoin now combines the idea of a decentralized currency, which should nevertheless offer a form of security. This is why the blockchain was invented. All transactions are traceable, but at the same time anonymized. Everything is visible, but you never know which transaction came from whom.
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How exactly does a transaction work?
You have a so-called wallet. There are now many different wallet providers. To do this, you have a specific individual address, a long series of numbers and letters. From here you can store, transfer or receive Bitcoin. Anyone can see this address, but whoever is behind it is anonymous. But you can see for every bitcoin, or for every value, where it comes from. Every transaction is therefore publicly available. Even if you have to read it first to understand it. This is the balance between security, which must be provided in any case when it comes to transactions of “money”, but also the preservation of anonymity. Many see this as an advantage of the cryptocurrency.
What are the downsides of bitcoins?
Often one comes into contact with a conspiracy theory approach in the Bitcoin world. The accusation that the government treats your money badly and that it can change its value at any time or print new money and so on. The connection between the classic libertarian idea clinging to Bitcoin users and conspiracy theories of this kind is drawn quite quickly. There are of course aspects of the whole cryptocurrency that can be criticized. Because of those who scream the loudest.
In general, despite the positive development, there are also negative consequences. For example, the financing of terrorism, a lot went through cryptocurrency because it is anonymized and unregulated.