Digitization is not stopping at the financial market. Digital crypto currencies such as Bitcoin, XRP, Dash or Ether are making headlines again and again on the international investment. But how do the digital payment systems actually work? And is crypto money safe or is a bitcoin IRA investment a risky way to make money? Here you can get all the important information and tips about the speculative object cryptocurrency.
What is cryptocurrency?
Cryptocurrencies, in English Cryptocurrencies, are virtual means of payment on the Internet. Cryptogeld is 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. However, these only represent a small percentage of the different forms of the crypto field, which in turn represent only a small proportion of the total sum of the different tokens of the respective crypto currencies. The virtual money is generated by special software and complex testing methods and encryption techniques. Important cryptographic methods are blockchains and digital signatures.
How do cryptocurrencies like Bitcoin work?
The special feature of non-state cryptocurrencies such as the well-known Bitcoin is the decentralized control of all processes by the other users. Each transaction of the bitcoin is published in the peer to peer network system 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 from each transaction. If the transaction is confirmed as legitimate, it will be documented in the blockchain.
A peer-to-peer network is working on the Blockchain – because proof-of-work promises profits in this type of trading. So that enough users invest time and above all computing power in the blockchain, the proof of work which can also be considered as reward of work is recognized. The more computing power and work invested in the blockchain, the higher the chances of benefiting from new issues and transaction fees. In analogy to gold mining, this process is referred to in English as mining.
The luring profits in mining mean that ever higher computing power must be applied. The increasing demands and the increasingly specialized hardware have created huge data centers worldwide, so-called mining farms. Ordinary PC users now have to expand their computer with high-performance global processing units and graphics cards if they want to participate in the mining of cryptocurrencies. If you want to enter in the world of trading digital currencies, you will need to have in depth knowledge about and information about the currencies.