Crypto Currencies Bitcoin - THE FUTURE - EXPLAINED IN AN UNDERSTANDABLE WAY 2020 - Crypto Supply GmbH
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2020
Crypto Currencies
Bitcoin
THE FUTURE – EXPLAINED IN
AN UNDERSTANDABLE WAY
© CRYPTOSUPPLY
I
For questions and suggestions:
info@cryptosupply.de
Publisher:
Crypto Supply UG (haftungsbeschränkt)
Klingenbrunnstr. 31
97422 Schweinfurt
Deutschland
Editing & Layout
VERTRAUENSSACHE a brand der Kitschke UG
(haftungsbeschränkt)
Image sources:
Pixabay
VERTRAUENSSACHE a brand from Kitschke UG
(haftungsbeschränkt)
Important note:The information and advice published in
the booklet have been carefully compiled and checked by
the author and publisher. However, no guarantee can be
given. Likewise the liability of the author and/or the
publisher and its representatives for personal injury,
damage to property and pecuniary loss is excluded.
All rights of distribution, also by film, radio and television, photomechanical
reproduction, sound carriers of any kind, excerpts reprint or storage and
recovery in data processing equipment of any kind are reserved. Photocopies
for personal and other personal use may only be made of individual
contributions as single copies.
II
1. Inhalt
Foreword ...................................................................................IV
2. What is a crypto currency? ............................................... 1
3. What does the blockchain have to do with bitcoin? .... 2
4. What is the blockchain? .................................................... 4
5. Mining.................................................................................. 6
6. What is the task of miners? .............................................. 7
7. Can a person create a hash alone?................................... 8
8. Properties of Crypto Currencies ..................................... 9
9. Transactional properties ................................................. 10
10. Monetary characteristics ................................................. 11
11. What can you do with crypto currencies? .................... 13
12. Buy goods ......................................................................... 13
13. Accepting as payment (For your company)................. 16
14. The way of Bitcoin: from your wallet to my wallet .... 18
15. Legality of Crypto Currencies ........................................ 19
16. How do you buy crypto currencies? (Bitcoin) ............ 20
III
17. Step by Step Guide to buying a guide a Crypto Currency
(Bitcoin) ..................................................................................... 23
18. In one view: That’s how you buy altcoins! .................. 27
19. Advantages and Disadvantages of a crypto currency. 28
20. Glossar .............................................................................. 31
21. Bibliography...................................................................... 33
Foreword
The Bitcoin was just the beginning! The Bitcoin is now
known to many people in Germany and is often equated
with the Blockchain.
But the blockchain is more than "just" a currency and will
change our world as much as the Internet did before. And
even with this, we have not yet achieved everything.
What some already hypen is for others crystal clear the future
and for those only a trend that "disappears again".
We at Crypto Supply are firmly convinced: "The blockchain
and the crypto currencies (yes, there is more than the
Bitcoin) are only at the beginning!
With financial expertise, entrepreneurship and pioneering
spirit, we dare to take the step into the 21st century.
Decentrality and freedom are the cornerstones of the
blockchain and we at Crypto Supply actively support these
values.
IV
With the latest mining hardware, you can be part of the new
(blockchain) world and actively participate in building it.
Admittedly, for outsiders it must seem a bit crazy what
happens around the blockchain and the crypto currencies.
But the possibilities around the blockchain and crypto
currencies are enormous.
With our booklet on crypto currencies you as a newcomer
get an insight into the fascinating world of the new
technology. From Crypto-Basics, how the blockchain works
for the Bitcoin, who the Miner is in the network (and what
he does), to the purchase of Altcoins, you get an all-round
view that is also worthwhile for laymen.
We hope you enjoy reading and look forward to welcoming
you to our community on Instagram, Facebook, Discord, by
email or in person.
Your Crypto Supply Team
V
2. What is a crypto currency?
The best known of all
crypto currencies (also
crypto currency) is
probably the Bitcoin.
Although the Bitcoin
exists only since 2009,
the beginnings of
crypto currencies lie
already in the 90's of
the last century.
In the 1990s there were many attempts to create a digital
currency, but no development succeeded at the time of the
breakthrough. There were many different reasons why the
systems of that time (e.g. Flooz, Beenz and DigiCash) failed.
However, the top three are probably fraud, financial
problems and fierce disputes between company employees
and their superiors.
All systems at that time were closely oriented to the non-
digital money system. This means that if person A wants to
transfer a certain amount of money to person B, i.e. makes a
transaction, the bank must verify this transaction (transfer
the money from A to B). The bank is regarded as a trusted
third party and can also have the money returned or blocked
in cases where a transaction is not permitted (legal). This
trusted third party approach failed in the digital payment
system with the failures of the companies behind the digital
currency. For a long time, a digital payment system was
therefore regarded as a lost cause and idle daydreaming.But
at the beginning of 2009, the digital currency world was
fundamentally changed. The Bitcoin was created by an
1
anonymous programmer or a group of programmers
(nobody knows that exactly) named "Satoshi Nakamoto". In
a previous letter from Satoshi, the Bitcoin system was
announced as an "electronic peer-to-peer cash system". The
concept is similar to peer-to-peer file sharing networks.
With the Bitcoin system, the Satoshi collective abandoned
the Trusted Third Party approach. The crypto currency is
completely decentralized, i.e. there are no servers and no
central control instance involved. By the way, Bitcoin means
"digital money": Bit (Bit = memory unit, Coin = coin).
In addition to the radical approach of rethinking the trust
logic of the existing monetary system, Bitcoin was only made
possible by a new technology that will change the world in a
similar way to the Internet: the blockchain.
3. What does the blockchain have to do
with bitcoin?
One of the most important problems that any payment
system has to solve is to prevent double spending of money.
In times when there was only cash, this was not a problem.
If you had 100€ (at that time DMark) in your pocket and
bought goods for 100€, your pocket was empty. Only what
is in the cash register/bag can be spent. With the book
money the whole thing could (theoretically) look different.
Anyone who has a full bank account actually "owns" book
money. The money "lies on the bank", it is not in your own
pocket. Book money does not physically change owners, e.g.
when buying a car, but is simply "booked" to the seller's
account. Theoretically one could say, person A books 100€
on the account of salesman B and the same 100€ again on
the account of salesman C. The 100€ would have been spent
2
twice. That is of course fraud! So that this does not happen,
it needs a guard function.
The traditional solution for this is a trusted third party
approach - a central server - which has recorded the balances
and transactions. So to speak a giant register with all
accounts and account movements (money is added, money
is debited). However, this method always entailed a control
authority, which essentially had control over the funds and
all their personal data.
This is simplified said the network of the traditional
monetary system:
• One central repository for all transactions and
balances
• A watchdog that has control over the money and
transaction data.
In a decentralized network such as the Bitcoin, each
individual participant must perform this task. This is done
via the blockchain - a public archive or ledger of all
transactions that have ever taken place in the network and
that are accessible to everyone. For crypto currencies, the
blockchain is a huge cash book, so to speak. In this cash
book it is noted how much Crypto money a person
possessed at a certain time and how much money was
transferred where. Of course the whole thing is encrypted.
How exactly the whole thing happens, including all typical
vocabulary from the crypto currency community will follow
later.
3
4. What is the blockchain?
Blockchain serves the transaction with Bitcoins practically as
a cash book. Each Bitcoin transaction is stored in the
blockchain. Thus a file is created from each Bitcoin
transaction. Since there are countless Bitcoin transactions
per day, a normal database would be full very quickly. The
situation is different with the blockchain.
The file for the Bitcoin transaction consists of the public
keys of the sender and recipient (wallet addresses) and the
number of transmitted coins. The wallets can be compared
to an account at a bank. The sender's transaction must also
be signed off with his private key. This encryption is called
cryptography.
Cryptography
means nothing other
than the encryption
of information. The
word cryptography
comes from Greek
and means "secret
writing". This
encryption achieves
information security when dealing with Bitcoin and other
crypto currencies, because nobody should be able to
manipulate digital currencies. So crypto currencies are not
just digital money, they are encrypted digital money. This
makes anonymous payments with Bitcoin possible.
4Especially in the early days of Bitcoin, this anonymous
payment option was used for criminal activities in Darknet.
Once the transaction has been encrypted, it is transferred to
the network. Before the process is completed, the
transaction must first be confirmed. Within a crypto
currency network, only the Miners can confirm transactions
by solving a cryptographic (encrypted) puzzle.
The miners accept the transactions, mark them as legitimate
and distribute them over the network. The miners represent
network nodes in the block chain, so-called miner nodes.
The miner network nodes in the blockchain are used to
receive new information, verify it and convert it into a new
data block. These data blocks do not consist of a single
transaction, but of several transactions that have been
verified by different miners.
After the miners have created a data block, it must be
included as part of the block chain. This task lies with the
full nodes, the "large" network nodes. The full nodes check
the created data blocks for their integrity and include these
data blocks in the block chain with the encrypted
information from the Bitcoin transactions.
After this process, the Bitcoin transaction is stored in the
blockchain in an unfalsifiable and irreversible manner and
the miner receives a reward. This reward, also known as
nodes reward, will be presented later, as it clarifies the
question of where new bit coins are created.
Basically, every crypto-currency network is based on the
absolute consensus of all participants on the legitimacy of
balances and transactions. If nodes of the network did not
5match on a single scale, the system would basically collapse.
However, there are a number of rules that are pre-defined
and programmed in the network to prevent this. This is the
network-specific protocol.
5. Mining
The mining of crypto currencies ensures that new coins of a
crypto currency are generated and that an already issued coin
cannot be used a second time for payment. In the traditional
monetary system, currencies are printed on paper. Mining is
a similar process for obtaining new bit coins or old coins.
Crypto currencies live on their decentralization. Conversely,
this means that many locations must be available to process
and secure transactions and synchronize the users of the
network. This requires the so-called miners. These miners,
also known as miner nodes in the blockchain, provide a
decentralized Bitcoin data center.
66. What is the task of miners?
Blockchain is (freely translated) a
"chain of blocks". A single block
consists of a lot of information
about transactions made
worldwide at a certain time. A new
block is added to the blockchain,
creating an eternally long list of all
transactions (transaction history).
The blockchain is openly visible so
that everyone can see WHAT has
been done for a transaction at a
specified time. What is still not
visible, however, is the WER
information involved in this transaction. Thus, the
blockchain is transparent and (pseudo-) anonymized at the
same time.
The task of miners is now to subject a created block with
information about transactions to a cryptography process. In
this process, the information is broken down using a
mathematical formula, compressed and coded as a number-
letter code (the hash). The hash is located at the end of a
block.
Hashs are easy to create, but once encoded, they are unique.
Even a different character in the information of a block
would create a completely different hash. The hashs are also
the reason for the extremely high history security in the
blockchain. Each hash also contains information from the
previous hash. This creates a chain whose individual links are
linked to each other. These chains act like wax seals. It is not
7possible to change a block without changing the complete
history.
Miners are therefore constantly on the lookout for new
information and make their computing power available for
this purpose. But since many people already do this, there is
competition among miners worldwide to find unprocessed
information. Why is it so attractive? The miner currently still
earns 12.5 bitcoins (1) for each hash created.
Before the big Bitcoin fever breaks out, mining becomes
more and more difficult over time. This is ensured by the
Bitcoin protocol, in which the rules are firmly programmed.
Of course, it is clear to everyone that a very simple data
collection could generate many hundreds of hashs in one
second and that all bitcoins (of which there is only a limited
amount) would be completely scraped off in a very short
time. The introduction of a so-called proof of work makes
mining much more difficult.
7. Can a person create a hash alone?
Theoretically, yes. In practice, however, Miner has to
modify the data he finds in order to create a hash. Here
they use a record, the Nonce, which belongs to every
transaction. The hash and the nonce must match. If the
hash and the nonce do not match, the nonce changes,
which in turn changes the hash of the block. It usually takes
many, many attempts to find the right nonce. That's why
most miners work together in a network. If the attempts
were successful, the reward is divided among the miners
according to their (computer) performance.
88. Properties of Crypto Currencies
Crypto currencies are encrypted, digital money whose
transactions are stored in the blockchain in an unalterable
and irreversible manner. Encryption is guaranteed by strong
cryptography. Crypto currencies are not secured by humans
or trust, but by mathematics. It is more likely that an asteroid
will fall on your house than that a Bitcoin address will be
compromised.
The protocol defines the rules of the network and is deeply
and firmly programmed. Together with the strong
cryptography and the storage of transcriptions in a
decentralized consensus database, the trusted third party
approach and the concept of blind trust become completely
superfluous.
Many people who are not familiar with the crypto-currency
material have concerns about how secure the Crypto facility
is at all. Nevertheless, more and more people are noticing
how the importance of crypto currencies is increasing. More
and more people hope to be able to earn a lot of money with
little effort by buying or selling crypto currencies. This is
supported by the rapid rise in the value of Bitcoins, but the
speculative nature of this investment was also reflected in
the rapid decline of Bitcoins in 2008.
A special feature of the Bitcoins transactions is that they are
irreversible. This means that once a transaction has been
completed, it cannot be reversed. This is in contrast to the
traditional money system, where you can have the bank
reverse a false transfer. This circumstance contributes to the
fact that there are people who do not feel comfortable
making transactions with crypto currencies, because a
9helping intervention of the bank is not possible. Complete
self-responsibility before the powerful intervention of a third
party.
On the other hand, this is exactly the reason why many
people are happy about crypto currencies. The banks cannot
influence the digital currencies and Cryptogeld owners can
act completely independently of the banking system.
When describing the properties of crypto currencies, a
distinction must be made between transactional and
monetary properties. Most crypto currencies have common
properties, but these are not carved in stone.
9. Transactional properties
1.) Irreversible: After confirmation, a transaction can no
longer be cancelled. Not by anyone. And no one actually
means no one. Not by you, not by your bank, not by the
Chancellor, not by Satoshi, not by your Miner. No one can
change the transaction then still. If you send money, send it.
Point. Nobody can help you if you sent your money to a
fraudster or if a hacker stole it from your computer. There is
no safety net.
2.) Pseudonym: Neither transactions nor accounts are
associated with real identities. You get bitcoins on so-called
addresses, which are randomly appearing chains of about 30
characters. While it is usually possible to analyze the
transaction flow, it is not necessarily possible to associate the
real identity of users with these addresses.
103.) Fast and global: Transactions are distributed almost
immediately in the network and confirmed in a few minutes.
Since they occur in a global network of computers, they are
completely indifferent to your physical location. It doesn't
matter whether you send Bitcoin to your neighbour or to
someone on the other side of the world.
4.) Safe: Crypto currency funds are locked in a public key
cryptography system. Only the owner of the private key can
send crypto currency. The strong cryptography and the
magic of large numbers make it impossible to break this
scheme. A Bitcoin address is more secure than Fort Knox.
5.) Without permission: You don't have to ask anyone to use
crypto currency. All you need is software that anyone can
download for free. After installation you can receive and
send Bitcoins or other crypto currencies. Nobody can stop
you. There is no porter.
The transactional properties show the nature of a crypto
currency. The monetary properties show the importance of
crypto currencies for the traditional monetary system.
10.Monetary characteristics
1.) Controlled Supply: Most crypto currencies limit the
supply of the tokens. In Bitcoin, the offer decreases over
time and will reach its final number by 2140. The final
number describes the maximum number of Bitcoins that will
exist. This currency quantity was clear from the start and
amounts to 20,999,999 bit coins (2). All crypto currencies
control the supply of the token by a schedule written in the
code. This means that the money supply of a crypto currency
can be roughly calculated today at any moment in the future.
11As of 24.08.2019, 17,895,175 Bitcoin (3) already exist. There
is no surprise.
2.) No debt, but bearer: The Fiat money in your bank
account is caused by debt, and the numbers you see in your
account are nothing but debt. It is an IOU system. Crypto
currencies are not debt. They represent themselves. They are
money as hard as gold coins.
To understand the revolutionary effect of crypto currencies,
both properties must be taken into account. The Bitcoin as
an unlicensed, irreversible and pseudonymous means of
payment is an attack on the control of banks and
governments over the payment transactions of their citizens.
Thus crypto currencies
face the so-called Fiat
money. Fiat money is a
mere means of exchange
without any real value of
its own. Example: the
100€ note is not worth
100€ of its goods value,
but only paper with ink on it. The respective state
government can however prescribe which currency is to be
regarded as legal tender. The crypto currencies are different:
Nobody can prevent you from using Bitcoin, nobody can
prohibit you from accepting a payment. A transaction
cannot be undone. Crypto currencies represent a limited,
controlled supply of money that cannot be altered by any
government, bank or other central institution. Crypto
currencies thus attack the scope of monetary policy. Crypto
currencies deprive the central banks of control over inflation
or deflation by manipulating the money supply.
1211. What can you do with crypto
currencies?
The point at which you can pay in any shop with a Bitcoin
or another virtual currency is still in the future.
But step by step we are approaching the point where the
acceptance of at least the Bitcoin, which is the same as that
of Fiat currencies, is getting closer and closer. The
acceptance of a medium of exchange is absolutely necessary
for a currency (e.g. Bitcoin) to be worth money.
What else you can do with crypto currencies is explained in
this chapter.
12.Buy goods
You can use crypto currencies to pay for goods. Crypto
currencies can even be used for a university degree. In the
past it was very difficult to find a merchant who accepted
crypto currency, if not impossible. Today, however, the
situation is completely different.
There are many merchants - both online and offline - who
accept Bitcoin as a means of payment. They range from huge
online merchants to small local shops, bars and restaurants.
Bitcoins can be used to pay for hotels, flights, jewelry, apps,
computer parts and even a college degree. The big
advantage: whether America, Europe or Asia. The Bitcoin is
a worldwide payment method.
Other digital currencies such as Litecoin, Ripple, Ethereum
and so on are not yet so widespread. Things will soon change
for the better, however, as Apple has now approved at least
1310 different crypto currencies as payment methods in the
App Store.
Of course, users of crypto currencies other than Bitcoin can
always exchange their coins for BTCs. There are also gift
cards that sell sites like Gift Off that accept about 20
different crypto currencies.
Gift cards allow you to essentially buy anything with one
crypto currency. Finally, there are marketplaces like Bitify
and OpenBazaar that only accept crypto currencies.
Investing
You can use crypto currencies to pay for goods. Crypto
currencies can even be used for a university degree. In the
past it was very difficult to find a merchant who accepted
crypto currency, if not impossible. Today, however, the
situation is completely different.
There are many merchants - both online and offline - who
accept Bitcoin as a means of payment. They range from huge
online merchants to small local shops, bars and restaurants.
Bitcoins can be used to pay for hotels, flights, jewelry, apps,
computer parts and even a college degree. The big
advantage: whether America, Europe or Asia. The Bitcoin is
a worldwide payment method.
Other digital currencies such as Litecoin, Ripple, Ethereum
and so on are not yet so widespread. Things will soon change
for the better, however, as Apple has now approved at least
10 different crypto currencies as payment methods in the
App Store.
14Of course, users of crypto currencies other than Bitcoin can
always exchange their coins for BTCs. There are also gift
cards that sell sites like Gift Off that accept about 20
different crypto currencies.
Gift cards allow you to essentially buy anything with one
crypto currency. Finally, there are marketplaces like Bitify
and OpenBazaar that only accept crypto currencies.
If you decide to invest in Crypto, Bitcoin is obviously still
the dominant choice. In 2017, however, Bitcoin's share of
the crypto market fell dramatically from 90 percent to just
40 percent.
There are currently many options, some of which are privacy
oriented, some less open, and even more decentralized than
Bitcoin and others simply copy other crypto currencies.
While it is very easy to buy Bitcoins - there are many
exchanges trading in BTC - other crypto currencies are not
so easy to buy or sell. Although this situation is slowly
improving, as big exchanges like Kraken, BitFinex, BitStamp
and many others now sell Litecoin, Ethereum, Monero,
Ripple and others. There are also a few other ways to get
coins, e.g. you can personally trade with a seller or use a
Bitcoin ATM.
Once you have purchased your crypto currency, you need a
way to store it. All major exchanges offer wallet services.
This may seem very convenient at first glance. But it would
be best if you store your assets in an offline wallet on your
own hard drive or even invest in a hardware wallet.
15A wallet is the safest way to store coins and gives the coin
owner full control over his assets.
As with any other investment, the market value of the crypto
currencies and the associated messages must be carefully
observed. Coinmarketcap is a complete solution for tracking
the price, volume, circulation and market capitalization of
most existing crypto currencies.
Depending on the jurisdiction in which you live, you may
have to include in your tax return any profit or loss you have
made by investing in crypto currencies. When it comes to
taxation, crypto currencies are treated very differently from
country to country.
In the USA, the Internal Revenue Service (IRS) has decided
that Bitcoins and other digital currencies should be taxed as
property and not as currency. For investors, this means that
accumulated long-term gains and losses from crypto
currency trading will be taxed at the capital gains rate
applicable to each investor, which is currently max. 15%.
13. Accepting as payment (For your
company)
The acceptance of crypto currencies as means of payment
is equivalent to the acceptance of cash.
If you own a company and are looking for potential new
customers, accepting crypto currencies as a payment
method can be a solution.
Interest in crypto currencies has never been so great and is
likely to increase. As interest grows, so does the number of
16Crypto ATMs (Automated Teller Machines) around the
world. Coin ATM Radar currently lists nearly 1,800 ATMs
in 58 countries. First, of course, customers need to know
that Crypto is accepted in a company. Simply putting a sign
at the checkout should do the trick.
Payments can then be accepted via hardware terminals,
touch screen apps or simple wallet addresses via QR codes.
There are many different services that can be used to
accept payments in crypto currencies.
For example, CoinPayments currently accepts over 75
different digital currencies and charges only 0.5 percent
commission per transaction. Other popular services are
Cryptonator, CoinGate and BitPay, the latter only accept
Bitcoins.
In the US, Bitcoin and other crypto currencies have been
recognized as convertible virtual currency. This means that
acceptance as a means of payment is exactly the same as
accepting cash, gold or gift cards.
For tax purposes, US-based companies that accept crypto
currencies must record a reference to turnover, the amount
received in a particular currency and the date of the
transaction. If sales taxes are payable, the amount due is
calculated on the basis of the average exchange rate at the
time of sale.
1714.The way of Bitcoin: from your wallet to
my wallet
Bitcoins are processed in
the blockchain.
Person 1 sends
a Bitcoin to
person 2 via a Bitcoin transactions from
wallet app. the same time are stored in
a data block.
The data block is checked
The data and verified by the
block decentralized Bitcoin
becomes network.
part of the
block chain.
The Bitcoins arrive in the
wallet of person 2. The
transaction fees are paid to
the miners.
1815.Legality of Crypto Currencies
As crypto
currencies become
more common,
law enforcement,
tax and regulatory
agencies around
the world are
working to
understand the
concept of crypto
money. This
should also help to determine where and how exactly crypto
currencies fit into existing regulations and legal frameworks.
With the introduction of Bitcoin, the first crypto currency
ever, a completely new paradigm was created. Decentralized,
self-supporting digital currencies that do not exist in any
physical form and are not controlled by a single unit have
always caused turmoil among regulators.
Many concerns have been expressed about the
decentralization of crypto currencies and their almost
complete anonymity. Authorities around the world are
concerned that crypto currencies are playing into the hands
of merchants of illegal goods and services. They are also
concerned about the use of crypto currencies in money
laundering and tax evasion.
19Since November 2017, Bitcoin and other digital currencies
have only been banned in Bangladesh, Bolivia, Ecuador,
Kyrgyzstan and Vietnam, with China and Russia also close
to banning them. However, other jurisdictions do not yet
regard the use of crypto currencies as illegal, but laws and
regulations may vary dramatically from country to country.
In almost all western countries, however, the purchase of
crypto currencies should be possible without problems and
German buyers in particular can choose from a variety of
crypto currency exchanges.
16.How do you buy crypto currencies?
(Bitcoin)
The following chapter deals with how to buy a crypto
currency or how to exchange a bit coin for another coin, a
so-called "Altcoin". Because, ever more humans would like
to invest in crypto currency.
But first of all, what are Altcoins? There are different
answers, but most of them can be divided into the following
three.
• Bitcoin was the first crypto currency. All other
crypto currencies are therefore called Altcoins by
Bitcoin followers. However, this very general
view is also very unspecific.Every crypto currency
that is based on the Bitcoin code (which is open
source) or can be derived from it is an Altcoin.
This understanding is already much more
differentiated, but here the question arises: What
20about crypto currencies that are neither Bitcoin
nor can be derived from the Bitcoin code?
• The Bitcoin is primarily intended as a value
memory. All crypto currencies that pursue the
same function, i.e. pure transaction and financial
resources, are to be described as Altcoins. This is
a very specific consideration and simultaneously
solves the question from the second definition.
In the next chapter you'll get a step-by-step guide to buy your
first Altcoin (a crypto currency that is meant to be a
transaction and finance currency). But first take a look back
at the prerequisites for buying crypto currencies.
There are many different ways to buy Bitcoins. There are
currently over 5,422 Bitcoin ATMs in 75 countries (4). In
addition, you can buy BTC with gift cards, crypto currency
exchange, investment trusts and sometimes even in retail
stores.
If it concerns other, less popular crypto currencies, the
purchase options are not so various. However, there are still
many exchanges where you can buy different crypto coins
for fiat currencies (Euro, Dollar, Yen...) or Bitcoins. Face-
to-face trading is also a popular way to purchase coins.
Purchase options depend on certain crypto currencies, their
popularity, and your location.
Let's be honest. From the outside, what's going on in the
crypto community must look kind of crazy. Between the
insane price volatility of our golden child Bitcoin (BTC), the
sibling rivalry between Ethereum (ETH) and Ethereum
Classic [ETC] and the danger of exchange hacks (if you look
21at GoxFinex!), it
may seem like quite
a risk to participate
in buying and
selling crypto
currencies
2217. Step by Step Guide to buying a guide
a Crypto Currency (Bitcoin)
Step 1: Buy your first bitcoin
There are various services that you can use here. We at
CryptoSupply recommend CoinBase as it is the easiest to
use. But there are also Circle, Shapeshift and Local Bitcoin for
those who prefer to remain anonymous when purchasing.
Use the paper currency (Euro, Dollar ...) of your choice to
buy any denomination of Bitcoin. Of course, you don't have
to buy a whole Bitcoin right away! At the all-time high of the
Bitcoin at the end of 2017, that would have been almost
17,000€ (5).
Since this can be too much investment for one or the other
for the beginning with crypto currencies, there is of course
also the possibility to buy parts of a bit coin. The following
table gives a quick overview of the units: 1 Bitcoin, 1 mBit,
1 Bit and the smallest unit 1 Satoshi.
1 Bitcoin 1,0000000000 BTC
1 mBit 0,00100000 BTC
1 Bit 0,00000100 BTC
1 Satoshi 0,0000000001 BTC
1: vom Bitcoin bis Satoshi
23Step 2: Get your bitcoin wallet!
One of the most important rules when dealing with crypto
currencies is never to leave the responsibility for your
coins to anyone else!
This means that you get your own wallet and keep track of
your private keys! You can get a Bitcoin wallet from different
sources, but we at CryptoSupply recommend Breadwallet.
It is what we ourselves use on our iOS.
But you can also use https://blockchain.info/wallet/#/ or
https://jaxx.io/ among other things. There are even
hardware wallets like https://bitcointrezor.com/ or
https://www.ledgerwallet.com/ and you can even store
your coins in paper wallets.
But please remember: If you misplace your private key,
your investment is lost!
Step 3: Selection of an Exchange and Exchange
Services.
Now that you've got your first Bitcoin, it's time to choose an
Exchange platform. There are many Crypto exchanges, so
it's best to use your trusted search engine to find the one you
like best.
We at CryptoSupply use https://bittrex.com. But we also
know that many others prefer https://poloniex.com.
Typically, an Exchange platform is where you would buy
Altcoins.
24The term Altcoins is a broad term. For the die-hard Bitcoin
followers, it means a crypto currency that is not a Bitcoin.
Other definitions mean Altcoin's crypto currencies, which
are not Bitcoin but are derived from the Bitcoin code. The
most specific definition, on the other hand, says that
everything that corresponds to the function of a Bitcoin
(transaction & funds) is an Altcoin. Some Altcoins are better
than others. Ethereum (ETH) is a very popular Altcoin, as is
DASH and of course STEEM! You can buy these coins at
pretty much any Crypto exchange.
To buy Altcoins you need an Exchange platform and
whether you like it or not: also Bitcoins. To purchase
Altcoins, you must first send some of your Bitcoins to the
Exchange so that you can use your Bitcoins to purchase the
Altcoins. Once you have done this, your BTC will be kept in
a hot wallet and is ready to be issued.
The Exchange will keep track of your BTC balance as long
as you keep it there. Other exchange services include up-to-
date crypto charts and margin trading.
Step 4: Buy your altcoin
This part's pretty simple. You can only buy Altcoins if
Altcoins are available. In order to buy Altcoins, someone else
has to sell!
So navigate to the Ledger (your wallet) and see how high the
price is for your desired coin.
If you place your purchase order/bid at a higher price than
the lowest price (seller price), it will usually be executed very
quickly.
25If not, you may have to wait a while for your order to be
executed. Once someone accepts your bid, the order will be
executed and you will find this old coin in your wallet at the
relevant exchange where you made the purchase.
Step 5: Sell your coin
Once the price of your coin has risen to a point where you
are satisfied with the sale (or not, and it has fallen to the
point where you want to reduce and run your losses...it's
good to be a crypto realist), you need to set a price for the
sale.
If you do this, you can set the price at which your trade, i.e.
the sale, should be executed. You can sell a whole coin at
once if you want.... but most people make a collective sale,
or several for a certain amount, to absorb price
fluctuations.
If a buyer accepts your ask price, your trade is executed and
your Bitcoin wallet is filled with the buyer's Bitcoins.
2618.In one view: That’s how you buy
altcoins! Step 2: have your own
wallet. Over the wallet
you can spend your
Step 1: Buy your bitcoin
first bitcoin
Step 3 + 4: exchange
platform to purchase
altcoins.
Bitcoins are exchanged
for altcoins
Step 5: Sell your altcoin.
Altcoins can only be bought if
someone else offers them.
Your offer must therefore be
accepted by the buyer.
The more desired your altcoin is, the
more your offer can be.
2719. Advantages and Disadvantages of a
crypto currency
Of course, there are not only advantages to crypto
currencies. Let's go straight into the content and see what
Cryptogeld has to offer.
Crypto currencies facilitate the transfer of funds between
two parties to a transaction; these transfers are facilitated by
the use of public and private keys for security purposes.
These transfers are carried out with minimal processing fees,
so that users can avoid the high fees charged by most banks
and financial institutions for transfers.
Blockchain technology is central to the attractiveness and
function of Bitcoin. The blockchain represents the cash
book of all transactions with crypto currencies. It stores in
the online ledger all transactions that have ever been carried
out with Bitcoins and provides a data structure for this
ledger. The online ledger or wallet is exposed to a limited
threat from hackers and can be copied to any computer with
Bitcoin software. This in turn means access to your own
wallte from anywhere.
Each newly created data block (in this case, each transaction)
must be verified by the ledger of a user on the market. This
means that the "account movements" with crypto currencies
are mapped exactly. This data block then becomes part of
the block chain, followed by another block, and so on.
The special feature is that the block codes always refer to the
previous block. This makes it almost impossible to falsify
and change transaction histories.
28Many experts see blockchain technology as an important
application for technologies such as online voting and
crowdfunding. Large financial institutions such as JP
Morgan Chase see the opportunity to reduce transaction
costs through more efficient payment processing thanks to
the potential of crypto currencies.
However, since crypto currencies are purely virtual and do
not have a central repository, a digital crypto currency
balance can be wiped out by a computer crash if no backup
copy of the holdings exists. Since the prices for the purchase
of crypto currencies depend purely on supply and demand,
the rate at which a crypto currency is exchanged for another
currency can fluctuate sharply.
The anonymity of transactions with crypto currency makes
it a well-suited medium for a variety of nefarious activities
such as money laundering and tax evasion. The proponents
of crypto currencies, however, often appreciate anonymity
very much. Some economists also regard crypto currencies
as a short-lived fad or speculative bubble - above all because
currency units, such as bitcoins, are not rooted in material
goods. Bitcoin has indeed already experienced some rapid
fluctuations and only recently, after an enormous upswing at
the end of 2017, very high losses in value.
Crypto Currencies are not immune to the threat of hackers.
In Bitcoin's short history, over 40 thefts have been
committed, including some that have exceeded $1 million.
Yet many people around the world look at crypto currencies
in the hope that there can be a currency that maintains value,
29facilitates exchange, is more transportable than hard metals,
and is outside the control of central banks and governments.
3020. Glossar
Altcoins all crypto currencies that are not
bitcoins (there are different
definitions here)
Bitcoin first serious crypto currency
Blockchain continuously expandable data
block list whose blocks are
concatenated and
cryptographed with each other.
BTC Abbreviation for Bitcoin
Coin coin (engl.) here a part of (any)
crypto currency
Kryptowährung digital, encrypted currency
Ethereum Crypto currency with own
blockchain
Exchange-Plattform a platform on which Bitcoins
can be exchanged for Altcoins
Fiatwährung in principle paper money like
Euro, Dollar, Yen...
Hot-Wallet Part of the digital wallet
Kryptographie cipher (Greek), here encryption
of data sets
31MBIT = Bit Micro-Bitcoin (0,000001
Bitcoin)
mBit Millibitcoin (0,001 Bitcoin)
Miner Miners provide computing
power to verify transactions on
the Bitcoin network.
Mining Bitcoin mining requires
computing power to verify
transactions. This process is
called mining.
Ripple ein Zahlungsnetzwerk
Satoshi smallest unit of a bitcoin
(0.00000001 Bitcoin)
Wallet digital wallet for crypto
currencies
3221.Bibliography
1. BTC-ECHO.
How does Bitcoin mining work? btc.echo.de. [Online]
[Quote from: 25. 08 2019.] https://www.btc-
echo.de/tutorial/wie-kann-ich-bitcoins-minen/.
2nd (fab). Numbers, please!
How many Bitcoins are there actually? heise.de. [Online] 08.
01 2019. [Quote from: 25. 08 2019.]
https://www.heise.de/newsticker/meldung/Zahlen-bitte-
Wie-viele-Bitcoins-gibt-es-eigentlich-4266249.html.
3. blockchain.com.
Bitcoins in circulation. blockchain.com. [Online] 24. 08
2019. [Quote from: 25. 08 2019.]
https://www.blockchain.com/en/charts/total-bitcoins.
4. Coin ATM Radar. Bitcoin ATM Map. coinatmradar.com.
[Online]
[Quote from: 25. 08 2019.] https://coinatmradar.com/.
5. BTC direct. Bitcoin course. bitcoindirect.eu. Online]
[Quote from: 25. 08 2019.]
https://btcdirect.eu/de-at/bitcoin-kurs.
6. Wuensch, Michael. bitcoin-2007769_1920 - Picture p.1.
Picture of MichaelWuensch on Pixabay, 2019.
7. xresch. analytics-3088958_1920 image p. 2.
Image of xresch on Pixabay, 2019.
8. lich, Edward. justice-2071539_1920 image p. 11.
image of Edward Lich on Pixabay, 2019.
9th WorldSpectrum. cryptocurrency-3085139_1920 Image
p. 12.
image of WorldSpectrum on Pixabay, 2019.
10. mark, David. man-80101_1920 image p. 3.
image of David Mark on Pixabay, 2019.
11. McGuire, Ryan. arm-wrestling-567950_1920 Image p. 6.
image of Ryan McGuire on Pixabay, 2019
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