How can I set up a Bitcoin bank

Cryptocurrencies:

an introduction to bitcoins and blockchain

In 2017, cryptocurrencies overran the world in a huge hype. Then came the correction phase and prices collapsed. Nevertheless: Bitcoins and Co. are the future. The reason for this is less due to the currencies themselves, but mainly to the technology - the blockchain.

A price increase of over 1,000% and a record high of USD 20,000 - that was achieved in 2017 for the cryptocurrency Bitcoin. Even after a dramatic price correction of the cryptocurrencies of around 75% in 2018, the spell remains unbroken.

What are Bitcoin and who is behind it?

Behind Bitcoins and Co. is a technology called blockchain. The blockchain is a decentralized data register through which information - such as financial transactions - is transmitted.

Several transactions are stored in a "block". This block is attached to existing blocks, which is why the technology is also called blockchain. Everything follows a linear structure - i.e. the recordings can always be traced. Each block is given a time stamp. The new block is linked to the previous block using a cryptographic "check value". This check value is called the hash value. Plus: it contains a checksum of all the information. This prevents duplication and ensures that new records are appended in the correct order.

The advantage: All transactions of the participants are stored decentrally on different node computers (called "nodes"). The more node computers take part in the confirmation of transactions, the better the decentralized database can protect itself against manipulation attempts.

Example: Imaginean endless cashier role in the supermarket. Every activity creates a new line on paper. No old row can be deleted without destroying the role. To be on the safe side, the information is recorded identically in many different "registers" at the same time. All transactions are therefore transparent, unchangeable and traceable.

How can you verify the individual blocks in the chain?

The so-called "miners" take care of this. You make the computing power of your computer available. For the energy-intensive and cost-intensive creation of blocks, they receive newly mined bitcoins as a reward (block reward). In total, there are only 21 million bitcoins that can be mined. According to calculations, this maximum should be reached in 2130. The price of a bitcoin is determined by supply and demand in the crypto market.

Who Invented Bitcoin?

So far it is unclear or disputed who is responsible for the Bitcoin blockchain Under the pseudonym Satoshi Nakamoto, the first specification of blockchain technology as a decentralized database management system was published in a white paper in 2008.

Cryptocurrencies: a flash in the pan or a breakthrough innovation?

Bank Austria expert Walter Pudschedl:

"The advantages of virtual money are obvious: Duplicate transactions cannot occur, as a transfer can technically only be made to one recipient. In addition, there is no possibility of credit or debt, as there is no overdraft. The payment processes are transparent, as every payment can be traced back to a Bitcoin address and can be viewed by any user. In addition, the nature of blockchain technology ensures the immutability, unstoppability and irrevocability of the transaction. "

But there is still the issue of irreversibility: payments cannot be withdrawn and energy consumption is disproportionately high. In addition, there is also the risk of total loss or theft with cryptocurrencies, and hacker attacks are also possible.