A cryptocurrency is a purely digital or virtual currency and basically consists of nothing more than entries in a special database, the so-called blockchain. The name cryptocurrency comes from the fact that cryptographic encryption is used to verify transactions and control the generation of new currency units. The encryption also ensures that no one can change the entries in the blockchain afterwards.
What are the most important retention obligations for sole proprietors? In the Billomat magazine we will tell you! The history of cryptocurrency
During the technology boom of the 1990s, there were many attempts to create a digital currency. Systems such as DigiCash, Flooz or Beenz appeared on the market, but failed after a short time and disappeared again. There were many different reasons for their failure. These included fraud, developers’ financial problems, and even disputes between the developers’ employees and their superiors. All these systems used a so-called trusted third-party approach. Trusted third-party are companies that verified and facilitated transactions. Due to the failure of these companies, the creation of a functioning cryptocurrency was considered hopeless for a long time.
At the beginning of 2009, a programmer who has not yet been identified beyond doubt presented Bitcoin as a cryptocurrency under the pseudonym Satoshi Nakamoto. Satoshi called Bitcoin a peer-to-peer system for electronic money. Bitcoin was the only fully decentralized cryptocurrency. Decentralized means there are no servers and no central control facility. Bitcoin is not controlled by banks, governments or developers.
[xyz-ihs snippet=”Flexible Accounting”] Basic problems with cryptocurrencies
One of the most important problems that a cryptocurrency must solve in order to be successful is the double issuance of currency units. The traditional solution was a trusted Trusted Third-Party – a central server – that kept records of the balances and transactions. However, this method always involved an authority that basically had control over users’ currency and personal data. In a decentralized network like Bitcoin, every single participant has to take on this task. This is done via the blockchain. The blockchain is, in a sense, a public ledger of all transactions within the networker. The data in the blockchain is available to everyone, so anyone on the network can view the account balance of each account. How are cryptocurrencies transferred?
Every transaction with a cryptocurrency is a file that contains at least two unique pieces of information. The sender’s public key and the recipient’s public key. In addition, there is the number of units to be transferred. The transaction is transferred to the network. Before it is completed, it must be confirmed. The confirmation can only be done by the so-called miners by solving a mathematical problem. The miners accept transactions, confirm them and distribute them over the network. Each node or computer on the network then adds the new transactions to its database. Once a transaction has been confirmed by the miners, it cannot be reversed and is forgery-proof. The miner is remunerated for his work with currency units and receives additional transaction fees.
A prerequisite for the functioning of a cryptocurrency is the consensus of all those involved in the network on the legality and correctness of balances and transactions. If there were differences between two nodes of the network on only a single account balance, the system would collapse. However, there are rules in the network that are intended to prevent this by appropriate programming. Similar questions:
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