Bitcoin and cryptocurrencies – Hype or hope about technology
Bitcoin and cryptocurrencies – Hype or hope about technology
To better answer this, we first have to understand what cryptocurrencies are and how they work. Therefore let us look into the technical as well as commercial aspects of cryptocurrencies. Let us start with the technical aspects in orderto answerour question of hype or hope.
A Cryptocurrency is a currency consisting of digital coins that are managed on a blockchain. As the name implies, a blockchain consists of blocks, that are created in a fixed interval, building a chain. Each block contains a set number of transactions. For each transaction that you run on this blockchain, you have to pay gas fees. Those are the prices you pay for the costs of processing your transaction and saving it on the blockchain.
One argument for blockchain transactions often is the distributed ledger technology. It is argued that trust into institutions is replaced by trust into the distributed ledger technology. Cryptocurrencies are therefore often described as decentralized. But a misconception is the difference between decentralized and distributed.
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