Bitcoins can be minted

Bitcoin: digital cryptocurrency on the rise

In addition to the money, the classic managed by banks has become a alternative form of payment educated. This currency, which is often viewed with skepticism, got one through extortion, drug trafficking and similar illegal transactions bad reputation.

But that doesn't mean that bitcoins have any greater disadvantages than cash. But how exactly does Bitcoin work and what is it in detail? A simplified Bitcoin statement states that it is a digital currency that can be exchanged anonymously between the participants.

But this description becomes the Options for this payment method not fair. The various Bitcoin systems that now exist are one valid alternative to the money business controlled centrally by the banks.

FAQ: Bitcoin

What are bitcoins?

Here you can find out what Bitcoins are all about and how they differ from other currencies.

How can I get bitcoins?

We explain in detail how you can receive Bitcoins and then pay with them.

Where can I pay with Bitcoins?

Bitcoins are often accepted as currency in the Darknet. This is also possible with the online platform Steam.

What is the difference between Bitcoin and other currencies?

This type of internet currency waives the Leap of faiththat the banks need. The history of all transactions is continuous and traceable documented for all participants and by randomly selected inspectors (Miner) approved. The log of all transactions (Blockchain) cannot be changed by a capable hacker without the manipulation being noticed. With this decentralized cryptocurrency every transaction can be proven in a forgery-proof manner.

With this system can worldwide paid as long as there is an internet connection. Especially Internet services can often already be paid in Bitcoin and large payment service providers also offer the Billing via Bitcoin to handle. Furthermore, large NGOs have started accepting donations in the form of Bitcoin. So he accepts Association for the Environment and Nature Conservation Germany e.V. Bitcoin donations already.

How does Bitcoin work?

Using Bitcoin is relatively easy. First you have to contact the preferred provider for the Bitcoin create an account. This digital wallet, the so-called Bitcoin wallet creating is the first step. This is where the Bitcoins or the cryptographic keys for the bitcoins saved. The wallet is protected by encryption, but it can Target of malware or other attacks. The quality of the protection depends largely on the provider.

Bitcoin trading is booming today. The digital marketplace Amazon already accepts Bitcoin as a payment option.

Will now started a businessyou want to pay with Bitcoin, the desired amount can easily be moved from your account to another. After that, the two parties involved in trading receive a new one "Proof" of your assets or the new status of the entire network. The ones for paying with Bitcoin fees are used to reward the controlling participants. The Amount of fees can be determined beyond the minimum amount, which increases the attractiveness of the inspectors enter the transaction.

How do you get bitcoins?

If an account has been created, this must be be filledif you want to pay with it. To get Bitcoin for your own Bitcoin wallet, there is two methods:

Acquire bitcoins

A possibility is to simply have another Bitcoin user transfer the amount to you. But this seldom happens without a good reason.

  • Currency exchangeSome services on the Internet already offer a simple change from the national currency Bitcoin. Here can be like in a usual Exchange office almost any currency can be exchanged or bought at a certain rate. Usually fall fees that are not the transaction fees. Bitcoin is paid for by credit card or other common payment methods.
  • tradeAnother way to get bitcoins is to ask for bitcoin for goods and services. Especially in the DarknetBitcoin is often used to pay for, where anonymity plays an important role.

Bitcoin mining

Except for the methods, by which too the worldly wallet is filled, there is still the so-called Mining, here you can generate bitcoins. This is not mining work, it is the Supervision of the Bitcoin network. In order to make it attractive for the participants to do the documentation conscientiously, will the effort is rewarded. After a certain amount of time has passed, the fees and newly generated bitcoins paid out to the minerthat generated the last valid block. Payment will only take place if the documentation is shared with enough others matches. This network could be called a Bitcoin server, but it is a network of many individual computers.

Will be a Bitcoin software offered for download, this is the offer Part of the network to become. Since Bitcoin became popular, four popular systems have emerged, all pointing to the same Blockchain give a lecture.

Well-known bitcoin software

Bitcoin wallet - Android-based Bitcoin client, with high security requirements

MultiBit - Simple wallet with an emphasis on performance. (will no longer be developed or supported)

Bitcoin Core - Original version that includes the entire blockchain. In October 2017, this file was already 136 gigabytes in size.

Electrum - Linux variant that only downloads part of the blockchain

Maintenance of the system

Instead of transferring the trust to a bank, everyone Accounts are kept clean, the miners maintain the log of all transactions in the Bitcoin network and continuously enter new transactions. Everyone new block in this chain is provided with a value that results from all previous blocks. So can controlled whether the protocol has been tampered with.

In the rare case that at the same time two new blocks are generated, a fork is formed. The shorter of the resulting chains will then be broken off at some point because the larger part of the network prefers the longer strand. No transactions are lost because both chains all operationsdocument that they work through.

The creation of bitcoin through mining

After it is clear how bitcoins can be used and how that Network controlled the question arises, how will new bitcoins create. There is no central bank that issues new bitcoins, nor are they minted anywhere.

The amount of bitcoins is up 21 million set. The unit Bitcoin can be again in 100 million Satoshi are divided, resulting in a total volume of 2.1 quadrillion satoshi. So far have been of this 16.6 million bitcoin put into circulation. Every time a valid block is established, the miner in charge an amount of new bitcoin paid out, plus the fees for the transactions, which are not newly created Bitcoins.

How is a valid block created in the blockchain?

In one computationally expensive Process are pending transactions and the current blockchain all participants in the network spread. Then the computers that are set up for mining start with blocks Transaction data, time stamp and checksum to form, to encrypt and then to communicate to the rest of the network. This will make the Transactions in the log entered.

These are then linked to each other in encrypted form and a value is formed that is called Check sum for the next block is used. A miner is selected at random every 10 minutes. Does he have one valid block generated, it is added to the chain, the new, longer blockchain is distributed to the network and the miner receives the Obolus paidearned by processing the outstanding transactions.

Are bitcoins really anonymous?

If continuously all transactions are documented it is difficult to imagine how anonymity can be preserved. Since the entire system is based on the Exchange of cryptographic keys based, the participants can also be disguised as desired. So long IP and Bitcoin addresses not assigned to any person payment transactions are anonymous and only those Movement of a certain amount of money is being held.

Still can no security from persecution or abuse guaranteed. The system can be attacked from several locations, the most likely being Vector for an attack the user is. Malicious software and spyware are both capable of the Infiltrate the user's devices and from there to transfer the corresponding keys if they are unprotected.

Such software can also Payments to or from individuals document on the computer and possibly assign a person clearly in comparison with other data. Get out of the blockchain and the transactions themselves no information about the client emerge.

Where are Bitcoin accepted?

Since Bitcoin is still a relatively young phenomenon it could be assumed that they have hardly found widespread use yet. But the list is not only amazingly long, it also contains many facilities that not on the internet are located.

Big Player (large company)

 

  • The online platform Steam, on which digital copies of video games are sold, allows Bitcoin as a valid means of payment to replenish the Steam balance.
  • Various airlines sell tickets for Bitcoin. Including are airBaltic and the Japanese airline Peach.
  • The offers and services from Microsoft can largely be paid for in Bitcoin
  • The computer manufacturer Dell indicates Bitcoin as a possible payment method.
  • Also Mozilla, the house in which the Firefox browser software was developed, accepts Bitcoin.

In addition to the large corporations however, small businesses have also noticed the potential of the alternative currency. Bitcoins become in a wide variety of locations around the world used. So there is in the self-proclaimed Bitcoin city of Arnhem in the Netherlands over 100 shops, restaurants and hotels that take for granted Accept bitcoins and have installed the technology required for the transaction.

Bitcoin can be used in Germany already be paid for in many shops and establishments. It is true that mostly small companies are involved in Bitcoin a future see, but the number of establishments using this form of payment is growing. Especially in the big cities and metropolitan areas and near the IT and hacker scene places that take bitcoins are easy to find.

In the Depths of the internet however, most of the illegal offers that can be acquired with Bitcoin can be found here. In the Darknet, various illegal goods and services that must then be paid for with Bitcoin. The offers range from Drugs from weapons to human trafficking.

Bitcoins criticism

Since the first essay about Cryptocurrency Bitcoins are criticized from many directions.

Security concerns

In the times Suspicion-independent mass storage of traffic data a cryptocurrency like Bitcoin can do that Means of self-protection be. This can stop unwanted tracking and protect privacy in digital payment transactions. However, feel Security agencies Such measures are disruptive, since the effort to extract encrypted data is many times greater than the mass data Examination of unencrypted data sets.

In countries like China is therefore how to deal with Bitcoin illegalbecause the government there has authority over payment transactions central looks at himself and wants to keep it. All over the world, secret services are searching under high pressure Opportunities to infiltrate the system and crack the encryption.

However, it should not be overlooked that it is criminal persons this makes it easier to pursue their illegal activities undetected. The Encryption of communication and payment makes it almost impossible, those responsible this way to convict.

Regardless of the Safety precautions But there have also been thefts and borderline situations with Bitcoin, in which the system almost collapsed. Wallet data has been stolen and many users already have it forfeited their credit. The operator of a Bitcoin wallet had speculated with the deposits of his clients and lost a value of 200,000 euros.

Future threats to the system

 

  • theftthrough malware or data loss
  • Restriction by Anti-money laundering measures Through the state
  • Explosion in fees, as a result of the overload of capacities
  • Low commercial Usability

Financial concerns

Some researchers fear that the growing popularity of bitcoins will lead to one Hyperinflation leads. If the money supply of the system were to be increased further, the following devaluation could lead to people losing their money in a moment forfeit all assets.

The "Bundesverband Digitale Wirtschaft" has expressly not advised to use it. This was justified with the lack of state control. This would encourage illegal activities such as money laundering and tax evasion, which could lead to you damage to society as a whole arise. The central bank of the EU locates the greatest danger in dealing with Bitcoin, in the low price stability. In addition, it would do the necessary Trust in the banks decomposed.

Known weaknesses of the Bitcoin system

The system can only implement updates for debugging purposes if the larger part of the network agrees and uses the current version of the software. Can a single user more than 50% of the computing power unite in the network breaks the principle of decentralized control.

With such an influence you could a malicious user Insert malware into the code of the Bitcoin software and infect the entire network. But this would require a network that unites with its computing power would have higher energy consumption than the state of Irelandcan be controlled by more than 50% by a single user. That a single person or group has a corresponding computing power undetected can generate is unlikely.

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Bitcoin: digital cryptocurrency on the rise
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