Is Zcash better than Monero

From Alt-Coin to ZCash: The Big ABC of Cryptocurrency (Part 1)

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Bitcoin, Ethereum, Litcoin are some of the cryptocurrencies that have caused a sensation in recent years

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Bitcoin, Ethereum, Litcoin are some of the cryptocurrencies that have caused a sensation in recent years

Image rights: Picture Alliance
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© Picture Alliance
Image rights: Picture Alliance

Bitcoin, Ethereum, Litcoin are some of the cryptocurrencies that have caused a sensation in recent years

Bitcoin, Ethereum, Dogecoin: cryptocurrencies are booming. For many Otto normal users, however, the crypto world is still a book with seven seals. That is why we clarify the most important terms from the world of cryptocurrency.

What is the B.lockchain what the joke on D.ogecoin, why is that interested F.tax office for cryptocurrencies and why is that Klima so burdened by Bitcoin and Co. - these and other questions are explained in the first part of the cryptocurrency ABC.

A - like altcoin

Everyone knows Bitcoin, Ethereum, Dogecoin, Monero or Litecoin are already less well known. And very few have ever heard of Boolberry, Electroneum or Primacoin. There are thousands of so-called altcoins and this ultimately means all coins that are not Bitcoin.

B - like blockchain

The blockchain is the technological basis of all cryptocurrencies. Unlike conventional currencies, Bitcoin and Co. do not have a central authority such as a bank. In order for the system to work, every participant in the network must have access to the transaction history. The blockchain can be imagined as a decentralized cash book that is distributed over millions of computers. This principle does not make counterfeiting and manipulation impossible, but it is very difficult.

C - like Coinbase

Probably the most famous crypto exchange in the world. When Coinbase made its stock market debut in mid-April, investors were scrambling for the company's shares. Other well-known crypto exchanges are Kraken, BSDX or Bitcoin.de. In the past, however, such crypto bad guys have also been hacked. Experts therefore recommend storing the coins on your own computer in a wallet.

D - like Dogecoin

Doge is a meme about a Japanese Shiba dog that has become the secret mascot of the internet over the past few years. In 2013, two software developers created a cryptocurrency called Dogecoin. The whole thing is actually meant as a joke, but it happens as it so often happens on the Internet: The joke becomes independent and the two programmers are very rich today. Now Dogecoin is even supposed to conquer space. Elon Musk, who also owns the space company Space X, has announced that it will launch a space satellite called Dogecoin 1 into space.

E like Ethereum

In terms of market capitalization, Ethereum is the second largest cryptocurrency behind Bitcoin. However, Ethereum is much more than “just” a cryptocurrency. Ethereum is an infrastructure, a blockchain, on which your own applications can run, such as smart contracs or special apps. Just like Bitcoin, Ethereum is based on the "Proof of Work" principle, but is to be converted to the more resource-efficient "Proof of Stake" process in 2021/2022.

F - like tax office

The tax office is also interested in cryptocurrencies, especially if they are sold for a profit. However, the profits are tax-free if you hold the cryptos for more than a year. The question of how the so-called "staking" is to be assessed from a tax point of view is controversial, because new income is continuously generated here. Some experts assume that the speculation period will then increase to ten years.

G - like conscience

Conscience can also plague crypto millionaires. In April, a Bitcoin millionaire from Greifswald donates one million to the Greif. This is the largest single donation to a party since 2005. The software developer had the feeling that he had undeservedly come to riches, and the high energy consumption of the Bitcoin system gave him a headache.

H - like hash rate

The hash rate indicates how difficult it is to mine certain crypto currencies. Also important in this regard is the so-called "halving", i.e. the reward that miners receive for mining Bitcoins. In the case of Bitcoin, this reward is halved every four years.

I - like ICO

ICO stands for "Inicial Coin Offering" and is based on the term "ICO", which is used to describe IPOs. Unlike an IPO, it is a fairly unregulated way of raising money. No shares are placed on the market either, but so-called "tokens".

J - like jackpot

Not only with Bitcoin, but also with Ethereum, Dogecoin and other crypto currencies: if you were there early, you definitely hit the jackpot. However, very few have seen the unbelievable increase in value of cryptocurrencies coming. In 2010 a programmer bought a pizza for 10,000 bitcoins. One can only hope that he liked it. As of today, 10,000 Bitcoins would be around 450 million euros.

K - like climate

More than New Zealand, more than the Niederladen, more than Italy: In order to document how high the power consumption of Bitcoin is, new countries have to be used as a benchmark over and over again. This is mainly due to the energy-hungry proof of work process. In comparison, the Proof of Stake process should work much more energy-efficiently and reduce power consumption by more than 99 percent. Some cryptocurrencies, such as Cardano, are already running on Proof of Stake and are therefore considered environmentally friendly.

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