Swiss Crypto Guide:

Buy cryptocurrency which & More!

Imagine you get the assignment, many transfers and execute transactions and document to have to. How would you go about doing that?

Probably you would use a Accounting in a cash book and document in a structured way who wants to transfer money to whom and how much.

Afterwards, you would probably process all the transfers and file the documentation. Then, when the next referrals are due, you start all over again.

Not much different works a Blockchain. Some cryptocurrencies are based on the so-called "Distributed Ledger" principle. In German this would be a Cash book, which stored decentrally .

So instead of a cash book which can get lost (just like bank X can have a server crash over the weekend and lose your account balance), there are countless, distributed cash books.

So on the blockchain, information is Block ordered stored. In the blocks, all transactions are documented and partly even publicly available.

Each participant in the blockchain owns a Copy of the information contained and is thus part of this decentralized structure. What advantages does this have?

Let's say your neighbor always greets you nicely, but secretly has criminal energy. He wants to get rich quickly and steal your cryptocurrencies. Your criminal neighbor now faces two big hurdles.

Firstly, it must Cryptography of the blockchain, for which it will need to overcome vast amounts of Computing power would have to raise. This will already cause him to fail.

But let's say he developed a supernatural supercomputer in his ETH studies and can use the Encryption solve. He then credits himself with a large fortune in the blockchain (our digital cash book) and is already looking forward to the villa on the lake.

However, since all the other participants on the blockchain have copies of our cash book and their entries show nothing of his assets, he will have to do without his mansion for the time being.

In professional circles, this is called "double spending", i.e., double spending of a coin. Blockchain technology prevents "double spending" by allowing the Accounting always accurate and confirmed by the majority of participants must be.

The confirmation of transactions is a fundamental part of the blockchain. For the confirmation itself, there are various procedures, in which cryptocurrencies often differ. At Proof of Work Algorithm (PoW) for example, the confirmation is made by so-called Mining realized.

But why would anyone in a decentralized system want to use their Computing power make available?

While traditional banks also pay their data centers out of their profits, blockchain also has financial incentives. In the case of a proof-of-work blockchain, the Mining new coins created. Those who make computing power available for mining receive freshly mined Coins. 

We could now discuss various algorithms of different blockchains. But you probably originally came to the world of cryptocurrencies because you are interested in their coins. So let's Coins and so-called Tokens take a closer look.