Cryptocurrencies offer enormous potential
Cryptocurrencies have received a lot of attention in recent years, but many still think the topic is too complex. It is worthwhile to deal with the topic. The possibilities that cryptocurrencies give you have grown enormously in recent years. But what are cryptocurrencies and what do blockchain and NFT mean?
To understand the benefits of cryptocurrency, one must look at the history of currencies. The first form of money was commodity money, i.e. means of payment that have their own value. For example, the Reichstaler was worth as much as the silver it was made of. In contrast, there are fiat currencies such as the dollar or the euro. Here, the value of a 100 euro note is many times the value of the paper. This is because the ECB and the national central banks promise that you can buy goods worth 100 euros with a 100 euro note. But what happens when trust in this promise is shaken?
This is exactly what happened during the financial crisis in 2008. The population was now looking for alternatives and in January 2009 Bitcoin was the first cryptocurrency to be circulated under the pseudonym Satoshi Nakamoto. The original idea of cryptocurrencies was to exclude the banks as a middleman for transactions. This should make transfers faster, cheaper, but also more anonymous while remaining secure. But Bitcoin could do more. The value of a bitcoin token is based on the bitcoin protocol, a set of rules that can only be changed by a majority decision of the community. So you are not dependent on administrators like the ECB, but trust in supply and demand. And the fact that the demand for cryptocurrency remains high is also forcing banks to rethink.
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But what makes Bitcoin secure? After all, a digital asset can easily be copied and stolen, which has prompted the entertainment industry, for example, to move away from buying a single product and towards subscription models.
Blockchain: more than a buzzword
This problem was solved with the concept of the blockchain. The blockchain is a database on which data can be saved and processed. In contrast to classic databases, the storage here is decentralized. This means that there is not one place where the data is stored, but the data is stored in processes that run on several computers at the same time.
These computers are linked together in a peer-to-peer network. Data is stored in blocks and these are chained together, hence the name blockchain. Each block is signed and also contains the signature of the previous block.
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If something is to be changed in the blockchain, for example if a transaction is to be carried out, a new block is generated by a so-called miner. Before it can merge with the other blocks, it has to be checked – and since every participant in the peer-to-peer network has access to the entire blockchain, manipulations would be noticed here. Only when everyone sends the OK does the block become part of the blockchain. The miner receives a small amount of cryptocurrency for providing computing power.
The blockchain is therefore not part of Bitcoin as a concept, but is used by Bitcoin to be particularly secure. This has led to the fact that there are now a number of cryptocurrencies that rely on the blockchain.
NFTs – My Picasso is stuck on the screen
While the Bitcoin blockchain can only be used to move bitcoins, other cryptocurrencies such as Ethereum or Solana also offer the option of adding NFTs to the blockchain. A non-fungible token (NFT) differs from a token in that it is unique. With tokens, it can happen that several tokens are interchangeable. It doesn’t matter whether I use one token to pay or two half tokens, they stand for the same value.
So an NFT is unique in the blockchain, but what can you do with it? Well, first of all, it allows you to prove ownership of something unique through the blockchain beyond a doubt. One possible application would be important documents such as an airline ticket or a vaccination certificate. But you can also digitally own things like art and collectibles in this way.
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In more and more video games, parts of the game world are sold as NFT. The possession of collectibles is particularly popular where you want to stand out from others, and thus especially in online games. But companies like Netflix have also recognized the benefits of NFTs and are selling individual scenes from their series “Love, Death & Robots”. And Instagram is also testing the possibilities of NFTs.
An exciting opportunity for fans and collectors to own something really unique. If you’re curious, buy crypto Solana and check out Solanart, the Solana NFT Marketplace.
Uncomplicated investing
But what is the best way to start investing? It is now possible to invest in cryptocurrencies using contracts for difference (CFD). However, this form of investment is risky . However, you can also buy cryptocurrency via a cryptocoin exchange platform such as anycoindirect.eu/en . Here you have the advantage that you have full control over your own expenses and do not have to pay extra as with CFDs.
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As more retail investors invest in cryptocurrency, it’s exciting to see how cryptocurrency and NFTs will change the way we buy and the new opportunities that blockchain will enable.
