Beginners Guide: Crypto Currency — What is it?
A trace and treasure hunt
Currencies have long since become an integral part of daily life. They accompany people in their daily lives and, if things go well, they fill accounts or purses. According to the Oxford Dictionary, currencies can be understood as “ a system of money in general use in a particular country.”
But what then is a “crypto currency”? How is it made? Who or what is behind it? How is it secured? How can you buy and sell them? And how can you get a better overview of the crypto market? These and other fundamental questions will be answered here in the coming weeks.
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Crypto currencies — did they just suddenly come?
Today, “crypto currencies” are becoming increasingly present in the media and in the public domain. But when and how did they come into the world? Dealing with these questions, you inevitably come across the year 2008 — an extremely turbulent year, not only for the financial and monetary systems. Something to date unthinkable happened: On September 15, 2008, the bankruptcy of the US investment bank Lehman Brothers became known and with it the collapse of one of the world’s major financial institutions. This triggered a huge chain reaction and plunged the global financial and monetary system into a devastating crisis with long-term effects — and many people lost their savings. An estimated 15 trillion US dollars were lost, and experts as well as governments more or less suddenly faced completely new questions. This “earthquake” required answers and solutions for which there was no blueprint yet.
But what does all this have to do with crypto currencies? A whole lot. After all, 2008 seems to have been a key year for crypto currencies. Until then, central institutions such as central banks had determined currencies in the western world. They acted as stability and currency guardians and intervened to regulate when they saw the need and made sure that money was not simply reprinted indiscriminately.
With Lehman’s bankruptcy, confidence in the previously centralized financial and monetary system was seriously shaken. Many people were plagued by the feeling of being powerless. It was the breeding ground of the desire for a new system beyond state or other institutional interventions and regulations.
When an eight-page article was published in November 2008, describing the technical possibilities for creating a decentralised digital currency, a completely new idea was born and fell on fertile ground. The topic was the bitcoin. The so-called “White Paper” entitled “Bitcoin: An electronic peer-to-peer cash system” presented a crypto currency for the first time. Author of this paper was Satoshi Nakamoto. Even if nobody knows him in person to this day and there are wild speculations about the person or even institution behind this name, the article published under this name or pseudonym is the starting point of all crypto currencies. A few months later, in January 2009, the associated software solution based on the new Blockchain technology finally appeared. Although declining significantly, Bitcoin is still the most important digital currency today — along with more than 1,600 others. Crypto currencies have been a real success story in recent years and now have a market volume of around 330 billion US dollars.
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