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How does the blockchain work to buy cryptocurrency which?
Do you want to invest your money in something you don't understand or only half understand?
This Swiss Crypto Guide summarizes the most important topics around Cryptocurrencies, whose Functionality and commitment together. You will shortly learn how the Blockchain works, which Mining is and how you find out, Which cryptocurrencies worth buying are.
If you are particularly interested in a topic, jump directly to it in the table of contents. Otherwise, let's start with a central question ...
Between colorful apps, greed and fear at crypto trading and wild technical terms, one central question should never be forgotten. What are cryptocurrencies useful for?
If you're wondering which cryptocurrencies to invest in in the first place, the question of which Application particularly useful. This way, you can find a technically useful application that will hopefully pay off in the long run. asserts itself on the market and becomes so valuable.
Our previous fiat money system Is centralized and has thereby some Restrictions and limits. Thus are Transfers international often expensive or financial transactions are linked to the opening hours of banks, for example.
Some Cryptocurrencies pursue the goal of being very low cost transactions to enable. Irrespective of country borders and times or days of the week, will be transparent, fast and secure transactions possible. No middlemanThe cryptocurrency is not a currency that can siphon off a fee, or a corrupt state that can arbitrarily dispose of your finances. This is how cryptocurrencies are often advertised.
By the way, most Cryptocurrencies not anonymous, as it is often portrayed in the media. Bitcoin for example is absolutely transparent and if you want you can see every single transaction publicly. This does not mean that your neighbor can see how much money you have.
In the example Bitcoin are transfers under a Pseudonym visible. Your neighbor only knows that the transaction belongs to you if he can identify you.
Next, let's look at how the blockchain roughly works to understand how cryptocurrency transactions happen
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.
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Coins and tokens are traded on crypto exchanges and often attract attention with spectacular price movements.
Coins and tokens are fundamentally different in their characteristics. While coins use their own blockchain, tokens do not. One more time?
Crypto Coins such as Ether (from Ethereum), Ada (from Cardano) or Bitcoin (from Bitcoin) serve as digital P2P currency. P2P stands for "person to person", i.e. from person to person, without intermediaries.
Crypto Tokens enable the creation of decentralized applications. A well-known example is the ERC-20 token on the Ethereum blockchain, which provides the basis for smart contracts.
Enough of the technical words, let's continue talking about coins. You can either buy them on exchanges or be part of new blockchain projects when they are launched.
When someone wants to bring a new blockchain technology to market, money is often needed to develop it. In the case of a so-called ICO (initial coin offering) Coins are therefore issued to investors and capital is collected. Such ICO investments often entail great risks, as the technology is still young and not mature.
Cryptocurrencies such as Bitcoin and Co have existed for a long time and can be traded via Crypto Exchanges Acquire
Similar to stocks or other investments, the purchase of cryptocurrencies requires a Trading place needed.
On the one hand, there are traditional trading venues or crypto exchanges of companies that are centralized are built. Known centralized crypto exchanges that we have tested are for example:
Those who want to buy cryptocurrencies on such exchanges can do so easily and conveniently.
You're now wondering why there are centralized exchanges, even though cryptocurrencies are a decentralized system want to create?
Access to centralized exchanges is easier for newcomers, at least so far. Nevertheless, there are decentralized exchanges that fulfill the core idea of a decentralized financial system.
A so-called DEX (Decentralized Exchange) enables trading between individuals without an intermediary. This is referred to as the P2P (Peer to Peer) Trading.
Since we would quickly go into depth at this point, we will not go deeper into the topic of DEX in this article. In the "10×10" magazine there is a good article about decentralized exchangeswhich you are welcome to look at if you are interested.
How you can make money on decentralized exchanges with your cryptocurrencies through liquidity mining etc.? You can find out how to make money with your cryptocurrencies on decentralized exchanges through liquidity mining etc. at the end of this article.
Examples of decentralized exchanges would be:
Congratulations! You are already very far in this Switzerland cryptocurrencies guide and already at the topic of Coin Custody arrived.
If you bought cryptocurrencies, you probably want them to be either secure or with them by means of Staking or similar. Earn money. For both topics, security is very important, let's discuss the topic of security first.
If you have bought your cryptocurrencies on an exchange, you can buy them there from many exchanges in the free of charge Wallet of the stock exchange save. The big advantage?
If you want to sell your coins directly at the next price increase, the ways are "short".
Nevertheless, your coins on an exchange are also subject to a certain Risk. Hacker have successfully stolen cryptocurrencies from exchanges time and again in the past. Regulatory risks (let's say the EU bans bitcoin - which, by the way, is always discussed) are also much higher on exchanges.
Therefore, it would be safer to keep your crypto assets in a Private Wallet. You can think of a wallet as a wallet of your cryptocurrencies.
In a crypto wallet, however, you do not secure your Bitcoins themselves, but only the accesses, i.e. the private keys (so called "bitcoins"). "private keys"), which are necessary for the release of your coins.
Since a reliable and secure wallet is crucial for the safety of your cryptocurrencies, you should rely on well-known wallets.
Please buy hardware wallets directly from the manufacturer and not via retailers like Galaxus or Amazon. Otherwise, you run the risk of someone manipulating your wallet and then stealing your coins.
Schwiizerfranke has the best experience with the wallets from Ledger *, which is why we are happy to recommend their excellent products here:
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Earn money thanks to cryptocurrency
Have you ever actively invested in currencies like the US dollar or Japanese yen? Probably not.
Investments in currencies are actually a Speculation at Price movements. Cryptocurrencies are so popular because (unlike fiat currencies like the U.S. dollar) they have enormous Increase potential offer
But that's not all, because you can use cryptocurrencies to earn a Build passive income. So you don't have to save your coins in your wallet and forget about them until the rates go up.
We now come back to how the blockchain works. The blockchain enables exchanges between you and me without an intermediary. Above we had described the Proof-of-Work (PoW) functionality.
In addition, there are also Proof-of-Stake (PoS) algorithms that require far less energy. With PoS, the correctness of transactions is confirmed by people who have a Hold certain amount of cryptocurrencies in the log.
The so-called crypto staking is rewarded and can generate passive income for you. You can use Staking for example at Swissquote operate!
Another source of income through cryptocurrencies is the so-called Liquidity Mining. For transactions such as trading on a decentralized Stock ExchangeAlthough intermediaries are not required, a certain amount of Liquidity. If you are an investor and want to sell your crypto assets to an exchange for the trade temporarily, you will also be rewarded for it.
If the topic of liquidity Mining interested, you can find in this post further immersion.
In this Swiss crypto guide you could learn from A-Z some topics about cryptocurrencies, the blockchain itself, or for example buying, storing coins and tokens.
Cryptocurrencies are not simply a new hype, but many of them offer very pragmatic solutions for our everyday life. You can through Crypto Investments or for example through Staking benefit from the emerging market.
However, always keep in mind that investments are generally always subject to risk. Investments in cryptocurrencies are considered particularly riskySo never invest more than you are prepared to lose in the event of an emergency.
Frequently asked by our readers: cryptocurrency which worth buying? No one can predict the future. For long-term crypto investments is the question of the application and the benefit certainly helpful. A meme coin mentioned by Elon Musk on Twitter can also be successful. But will this still be valid in 10 years?
Please leave your prediction in the comments to the following question: Where do you see cryptocurrencies in our everyday life in 10 years?
No, cryptocurrencies are still on the blockchain. Your wallet only contains the access keys to your cryptocurrencies. A wallet is therefore more of a digital bunch of keys than a digital wallet.
A short version: Price gains on cryptocurrencies are not taxed in Switzerland. However, there are important aspects to consider. You can find everything in the Crypto Tax Guide here on the blog.
You can check which cryptocurrency is worth buying, for example, by asking about the benefits. Is a cryptocurrency really useful in the future? What problem does it solve, what competition does it have and what risks does the project have? In this way, you can easily test which cryptocurrency is worth buying.
Either with fiat currencies or in exchange for other cryptocurrencies, you can buy cryptos. For this purpose, there are centralized, but also decentralized exchanges.
A cryptocurrency is a digital currency for exchanging assets on the blockchain without an intermediary. In other words, a so-called peer to peer currency.
A cryptocurrency is a digital means of payment. It does not require a bank between the sender and the receiver. The payment is made directly between the two people.
This would be a very simplified cryptocurrency explanation for beginners or children.
One Response
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