Digitization is also not stopping at the financial market: digital crypto currencies such as Bitcoin, XRP, Dash or Ether are making headlines again and again. But how come the digital payment schemes truly work? And is crypto money a safe investment or a risky way to make money? Here you can get all the important information about the speculative object crypto currency.
What is crypto currency? Definition and explanation
Crypto currencies, in English crypto currencies, are virtual means of payment on the Internet. Cryptogeldin StsRoyalis almost exclusively digital currency with no physical equivalent in the form of bills or coins. The only exceptions are security tokens, which are also called asset-based tokens, where the corresponding values are deposited in dollars, euros or gold.
What is a blockchain?
A blockchain is a decentralized database, in which so-called “blocks” of records are concatenated into a continuously expandable list in the form of so-called “hashes”. This should ensure the integrity of the crypto currency against subsequent manipulation. All transactions taking place are recorded in chronological order in the form of so-called hash values in the blockchain.
How does the encryption work?
Most crypto currencies, such as Bitcoin, are based on cloud- and software-based peer-to-peer networks. All information within these networks is accessible to all other network participants. Security is ensured by special cryptographic encryption techniques. Each participant uses 2 related cryptographic keys:
What is a crypto currency wallet?
The cryptographic keys are stored in a file called cyberwallet, online wallet or simply wallet. A wallet has roughly the function of a virtual account: Here are credits and entries and exits of each crypto currency recorded and transactions made.
How do crypto currencies work?
The special feature of non-state crypto currencies such as the well-known Bitcoin is the decentralized control of all processes by the other users: Each transaction is published in the P2P network and must now be checked by other participants based on the previous entries in the block chain on whether the public The sender’s key is legitimate and whether the account is not covered by the transfer. Overdrafts should be excluded. If the transaction is confirmed as legitimate, it will be documented in the blockchain.