Why is crypto currency so important these days

Cryptocurrencies

Cryptocurrencies are young, sometimes playful, at the same time worth billions and can hardly be stopped. Bitcoin is the veteran and top dog. The digital currency gave the go-ahead for a new era of payment transactions and has spread around the globe at lightning speed. Idea: no banks, no state interference. This is popular with many users, arouses desire, arouses curiosity and of course also calls critics to the scene. While on the one hand the merits are preached and a complete branch of the economy gradually emerges, doubters see the foundations of the financial system at risk. Even though it's not yet five years old, cryptocurrencies are making for a lot of talk. And since it's all about money, the debate will go on for a long time.

News about the awareness of Internet currencies

The awareness of internet and crypto currencies is increasing continuously. A survey by the industry association Bitkom showed the following:

  • 36 percent of those surveyed have heard of Bitcoins before
  • 43 percent of those surveyed assume that virtual currencies and payment technologies will continue to develop
  • 52 percent of those surveyed can imagine using Internet currencies for online shopping
  • 20 percent of those surveyed can imagine using Internet currencies for international transfers, flight bookings and the like

However, the survey also showed that the security of digital currencies is still viewed critically:

  • 42 percent of respondents said they were worried about their private data and
  • 62 percent of those surveyed fear attacks by hackers or viruses on their digital wallets

Number of cryptocurrencies

The Coinmarketcap.com portal currently lists 1,293 cryptocurrencies. The market capitalization of all cryptocurrencies amounts to a little more than 375 billion US dollars. That is around 66 percent more than on November 17, 2017 (USD 226 billion). Bitcoin accounts for around 63 percent of this amount, at 237 billion US dollars (compared to 57 percent on November 17, 2017). (As of December 11, 2017).

Crypto exchanges in comparison: currencies, payment methods and fees

Crypto exchangeAvailable currenciesPayment methodsfees
Anycoindirekt.euBitcoin, Litecoin, Ether and much more.SEPA transfer, instant transfer, Giropay, TrustPay, iDEALDepending on the transaction volume (e.g. around 20 euros fees when buying Bitcoins for 1,000 euros)
Bitcoin.deBitcoinSEPA transferMarketplace fee: 0.8% for express trading, 1.0% for SEPA trading
plus withdrawal fee
OctopusesBitcoin, Litecoin, Ether and much more.SEPA transferFee overview here; 0.001 Bitcoin withdrawal fee

Where can I buy bitcoins?

Since creating bitcoins themselves has proven to be unprofitable, the only option available to interested parties is to buy bitcoins on the relevant marketplaces. Bitcoins can be bought by other users here or your own bitcoins can be offered for sale. The price is determined exclusively from supply and demand. But which are big and reputable Bitcoin marketplaces?

Anycoindirekt.eu

Anycoindirect is a major Bitcoin trading venue. Bitcoins can be bought or sold quickly and unbureaucratically here. The payment options available here are, for example, Giropay, instant transfer or SEPA transfer. If you have any questions or problems, an employee of the Bitcoin Exchange can be reached via live chat, WhatsApp or Skype. Anycoindirekt is operated by Phoenix Payments BV, based in Veghel (Netherlands). By the way, at Anycoindirekt.eu not only Bitcoins, but also many competing currencies (e.g. Litecoin, Ether, Peercoin) can be traded.

Register now at Anycoindirekt.eu

Bitcoin.de

Bitcoin.de is a German-speaking marketplace for buying and selling cyber currencies. A marketplace fee is payable for each transaction. This is 0.8% percent when using express trading or 1.0% when using SEPA trading. The fee is shared between the buyer and seller. The operator here is Bitcoin Deutschland AG, based in Herford (a company of the Bitcoin Group SE). However, only Bitcoins can be traded here and therefore no other crypto currencies.

Register now at Bitcoin.de

Octopuses

Another exclusively English-speaking Bitcoin marketplace is Kraken. The operator of sick is Payward Inc., based in San Francisco (USA). Here too, not only Bitcoins, but also numerous other crypto currencies (including Litecoin, Ether, Peercoin) can be traded. The amount of the fees can be found here.

Does sales tax apply when buying and selling cryptocurrencies?

The question of whether sales tax is due when exchanging cryptocurrencies for national currencies was answered in the negative by the European Court of Justice (ECJ) in its judgment of October 22, 2015 under file number C-264/14. The ECJ is of the opinion that digital currencies like Bitcoin must ultimately be treated like any other means of payment. As a result, no sales tax may be charged when exchanging Bitcoin for national currencies.

Current prices of Bitcoin, Ethereum, Ripple, Litecoin and DASH

For what we believe to be the most important crypto currencies Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin and DASH, we have prepared the current rates in EUR for you based on the information from Coinmarketcap.com:

Buy Bitcoin and Co. at Anycoindirekt.eu

Performance of cryptocurrencies

Under the aspect of the performance of cryptocurrencies, we want to consider the maximum number of possible transactions per second at this point. A high transaction speed is particularly important when it comes to using cryptocoins as digital payment systems in real life or even between machines in the “Internet of Things” (IOT). For comparison, we not only compared the maximum number of transactions per second for selected cryptocurrencies, but also contrast them with the processing speed of established payment service providers such as PayPal, VISA and Alipay:

Payment service provider / cryptocurrencyTransactions per secondHints
Bitcoin7theoretical value
Bitcoin to Segwit2x9,8theoretical value
Ethereum
20theoretical value
Litecoin
56theoretical value
Bitcoin Cash92theoretical value
PayPal
450theoretical value
IOTA
800theoretical value, further scalable
DASH
1.500theoretical value
Stellar Lumens4.000theoretical value
Ripple
24.000theoretical value
VISA56.000theoretical maximum value, currently 2,000, at peak times 4,000
Alipay
256.000value reached in November 2017
RBBC (Red Belly Blockchain)400.000theoretical value, currently only planned, not yet in operation
Raiden (via Ethereum network)>1.000.000theoretical value, currently only planned, not yet in operation

Transaction costs for Bitcoin, Ether, Litecoin, Dash and Ripple

In addition to the number of transactions per second, the costs per transaction are the second important point that needs to be answered when answering the question of whether a cryptocurrency is even suitable for use as an alternative means of payment. We looked at Bitcoin, Ether and Dash in this regard and calculated the costs per transaction for the respective cryptocurrency based on current data. So that our readers can understand the calculations, we also publish the calculation steps:

Transaction costs with Bitcoin (BTC)

  • 30 satoshis are charged per byte
  • According to Bitcoinfees.earn.com, 225 bytes is the average transaction size, which results
  • 6,750 Satoshi transaction fee
  • 1 Satoshi = 0.00000001 BTC, so
  • Transaction Fee = 0.0000675 BTC

Transaction costs with Bitcoin Cash (BCH)

  • 1 satoshi are charged per byte
  • According to bitinfocharts.com, the average transaction size is 70 bytes
  • 70 Satoshi transaction fee
  • 1 Satoshi = 0.00000001 BTC, so
  • Transaction Fee = 0.0000007 BCH

Transaction costs with Ether (ETH)

  • 21,000 "gas" are charged per transaction
  • 1 "gas" = 20 "Gwei"
  • 1 "Gwei" = 0.000000001 ETH, this results in
  • Transaction fee = 21,000 x 20 x 0.000000001 ETH = 0.00042 ETH

Transaction costs at Litecoin (LTC)

  • 0.01 LTC for transactions smaller than 5,000 bytes
  • 0.02 LTC is recommended when fast execution of the transaction is desired
  • Average transaction size is 500 bytes

Transaction Fee = 0.01-0.02 LTC

Transaction costs at Dash (DASH)

  • Transaction fee = 0.0001 DASH since the network upgrade to version 12.2, before that 0.01 DASH)
CryptocurrencyPrice in EURTransaction costsTransaction costs in EUR
BitcoinEUR 8,940.630.0000675 BTC0.60 EUR
Ether673.37 EUR0.00042 ETH0.28 EUR
Litecoin163.78 EUR0.001 LTC0.16 EUR
DASH469.28 EUR0.0001 DASH0.05 EUR
Bitcoin Cash987.77 EUR0.0000007 BTC0.00069 EUR
Ripple0.761802 EUR0.00001 XRP0.000008 EUR

The history of digital currency

The concept behind the digital currencies dates back to 1998. Wei Dai formulated the basic idea and made it public on the cyberpunk mailing list. It took ten years for the idea to be implemented. It was picked up by Satoshi Nakamato - whether this is a person or a group has not really been clarified to this day. In 2008 he published the work "Peer-to-Peer Electronic Cash System" about a payment system that works from person to person without the intervention of an authority such as a bank. The result was the Bitcoin protocol based on cryptography. On January 3rd, 2009 the time had finally come: The first bitcoins saw the light of day and were "mined" electronically.

The fact that a new, exclusively digital currency was launched in the time of the financial crisis, of all times, is certainly not by chance. Confidence in the financial sector was deeply shaken. Banks had and still have a difficult position today. A currency in which banks have no influence, do not charge fees, do not speculate and do not enrich themselves at the expense of customers, is a ray of hope, so to speak.

How cryptocurrencies work

But how does such a cryptocurrency actually work? Were new banknotes printed overnight? Not at all. Cryptocurrencies exist purely digitally as a file, although Bitcoin coins were offered at times. Instead of putting euros and cents in your wallet, Bitcoin and Co. are put in a digital wallet. To explain it using the example of Bitcoin:

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Anyone can set up a corresponding online account within minutes without having to give a name or address. It is based on a public and a private key. You automatically become part of the network. The public key is required to assign and check transactions. The system compares whether the bitcoins actually belong to whoever sends them to another use. The booking is stored in a public booking system that can be viewed by everyone. The process is signed with the private data key. This is to prevent changes being made on the way from A to B. The confirmation of a transaction via the network currently takes just under ten minutes with Bitcoin.

Digging instead of printing

Since cryptocurrencies are not printed, they have to be “created” in some other way. In the case of Bitcoin and many other digital currencies, the units are searched for or mined. Whoever wants to swing the virtual “pick” has to solve cryptographic tasks. The system issues bitcoins as a “reward” for the correct result. At first the tasks were much easier. Today it takes a lot more computing power to be successful. For this purpose, users can create pools in order to achieve their goals more quickly. Sometimes operations are carried out in gray areas by hiding the mining function, for example, in free applications for smartphones and tablet PCs. Newer cryptocurrencies have revised the system so that everyone has a chance and not only the computing power counts. The units are then assigned at random.

Exchanges for digital currencies

Another option to get hold of digital currency units is through purchase. Exchanges have been established for these purposes. Here you have to register and usually also provide a "real" bank account for legitimation. This gives the actually desired anonymity a slight crack. Alternatively, there are - but not nationwide, but rather selectively in a few large cities - machines that exchange euros or other currencies for Bitcoin. Or you ask acquaintances and friends about the crypto currencies and agree directly on the price.

Quantity limits and exchange rate fluctuations

The amount of money that is put into circulation is usually clearly defined in the case of cryptocurrencies. For bitcoins, the upper limit is 21 million. As of November 2012, 10.5 million bitcoins had been issued. This number halves every four years. Accordingly, 5.25 million Bitcoins will be added by 2016. The limitation is necessary because otherwise there would be a risk of inflationary diversification.

The value of a single unit, whereby Bitcoins work with eight decimal places, results solely from the interplay of supply and demand. Since the demand has increased steadily over the past few years, Bitcoins have increased in value. The danger here: Since the market is manageable, the pendulum swings extremely strong even with the slightest breeze. Cheering heavenly and saddened to death lie close together.

You can find more infographics at Statista

Buy bitcoins - yes or no?

Bitcoin is currently the most popular cyber currency. Especially in the recent past, digital currencies have experienced a literal hype. Some of the prices climbed by several hundred percent within a year. These price increases are now attracting more and more investors to the “cool” payment system. But an investment in Bitcoins, Litecoins, Ether and Co. should be carefully considered despite all the temptation. In particular, the investor should be aware of the functionality and the resulting opportunities and risks.

This is how the Bitcoin system works

Bitcoin (German: "digital coin") is a so-called crypto currency. The introduction of the Bitcoin network in 2009 was the answer to the momentous financial crisis. The aim was to introduce a means of payment, which independent of governments and banks is working. The Bitcoin rate is not aimed at other currencies, but solely in terms of supply and demand. Of course, this also means that the Bitcoin courses extremely volatile are. Two-digit price changes within a week are absolutely not uncommon here. The system is essentially based on a decentralized database managed by the users themselves. All transactions are documented here in a so-called blockchain. The blockchain is a special database where the respective hash values ​​(similar to a journal) are stored.

There is only a certain number of bitcoins. From a certain point in time, it will no longer be possible to generate new bitcoins. Such a limitation in the context of a mathematical formula naturally has an impact on demand. Trading in bitcoins takes place in principle using pseudonymous addresses instead of. Accordingly, it is not possible to identify the trading partners. In the past, this anonymity has repeatedly drawn criminals onto the scene.

If you have bought bitcoins, you can Prove possession using a cryptographic key. Bitcoins are often stored in so-called wallets. There is a digital signature for every transaction and it is stored in the blockchain described. To this day, there is still the theoretical possibility of generating bitcoins yourself by solving highly complex mathematical equations. However, this requires extremely powerful computers. As a rule, the costs now outweigh the income. Bitcoin trading takes place at the Bitcoin trading venues such as Kraken or Anycoin directly instead of.

Taxes on Profits

As with any other investment, when buying Bitcoin, Ether and Co., the question arises of how to treat capital gains, which are the rule rather than the exception in view of the enormous price increases.

Profits tax-free after twelve months

Anyone who has invested in cryptocurrencies can receive tax-free profits after the speculation period of twelve months.Profits from the sale of cryptocurrencies are treated like normal currency profits or physical gold, for example. However, if you sell your Bitcoins within the speculation period, you must tax the profit above the exemption for private sales transactions of 600 euros per year at your personal income tax rate:

Purchase dateDate of saleProfitTax treatment
03.01.201620.11.20171,500 eurosall profit is tax free
03.01.201720.11.2017500 euroProfit is below the exemption of 600 euros per year and is therefore tax-free *
03.01.201720.11.20171,500 euros600 euros tax-free, the remaining 900 euros must be taxed at the personal tax rate *

Cryptocurrencies are virtual currencies

Not everyone knows, but is immensely important, the fact that cryptocurrencies were already classified as "virtual currencies" by the European Banking Authority (EBA) in 2014. What does that mean for Germany? BaFin has stipulated that the use of cryptocurrencies as a means of payment is generally permitted. Commercial trading in cryptocurrencies, on the other hand, is classified as a financial service.

Since every financial service provider must be approved by BaFin, the operation of a crypto exchange or, in general, the commercial exchange of crypto currencies into other currencies or from official currencies into crypto currencies is subject to authorization. Providers who want to provide such services have to comply with a series of requirements to identify their customers (know your customer), money laundering and terrorist financing. Providers who act without the permission of the BaFin will be requested by the same very quickly to cease their business operations.

EU Anti-Money Laundering Directive = end of anonymity

The (in practice not 100% given) anonymity of Bitcoin and Co. is one of the arguments of their advocates. The EU money laundering directive passed in December 2017 will basically come to an end as soon as it has been implemented in national law. This provides for the abolition of anonymous money transfers (Big Brother is watching you) and threatens to register all Bitcoin addresses. Financial service providers who operate crypto exchanges or crypto marketplaces must also provide the Customs Financial Intelligence Unit (FIU) with all information about their customers and their transfers on demand.

In conjunction with the transfer data stored in the blockchain, it would then be easy for the FIU to monitor a large part of the payment transactions - especially if both participants in a transaction use an online wallet.

Alternatives to Bitcoin

Bitcoin is the most popular, but by no means the only cryptocurrency. Since Bitcoin has had to struggle with a crisis of confidence in the recent past, the call for alternatives has become louder. Well-known alternatives to Bitcoin are currently mainly Litecoin, Auroracoin and Ether. We would like to introduce these briefly:

Litecoin

Litecoin is arguably one of the biggest Bitcoin competitors with a market value of around $ 425 million. The peer-to-peer network is structured similarly to that of Bitcoin. The key difference is that faster transaction rate. For comparison: With Litecoin, transactions are signed every 2.5 minutes (Bitcoin: every 10 minutes). Those responsible promise themselves from this higher level of security, on the other hand, accept greater power consumption. The Litecoin-Euro exchange rate has experienced a boom recently. In March 2017, a Litecoin was still available for around five euros. Today (July 24th, 2017) an amount of more than 37 euros (!) Has to be spent for a Litecoin. Overall that is Litecoin price increased by over 900 percent within a year.

Buy Litecoin at Anycoindirekt.eu

Auroracoin

Another bitcoin alternative is Auroracoin. This crypto currency was also created in response to a financial crisis (in this case in Iceland). The Scrypt process is also used here. The total amount is limited to 21 million. Around half have already been produced. Every Icelander should receive 31.8 Auroracoin when verified with their national personal identification number. This means that Auroracoin has at least a more official “touch” than the competing products Bitcoin and Litecoin.

Ether

Ether is the cryptic means of payment from Ethereum, a platform for executing so-called smart contracts (= computer protocols that map contracts). The Ether-Euro exchange rate also exploded within a year. While this was around 15 euros at the beginning of March 2017, it was already over 195 euros today (7/24/17). Within one year, this resulted in an increase in value of almost 1,500 percent (!).

Buy ether at Anycoindirekt.eu

More Bitcoin Competitors: There are still several hundred other alternatives to Bitcoin. Well-known cyber currencies are among others Monero, NXT, Zcash, Peercoin and XRP.

Price development in comparison: Bitcoin, Litecoin and Ethereum

CryptocurrencyCourse (08/09/16)Course (08/09/17)Price increase (1 year)
Bitcoin526.29 euros2,868.00 euros+445%
Litecoin3.38 euros42.73 euros+1.164%
Ethereum10.96 euros248.13 euros+2.164%

Source: Coingecko.com, own calculations

Hundreds of currencies

However, this does not slow down the stone that set Bitcoin in motion. It is getting bigger and bigger and is gaining momentum. Overviews have to be supplemented with new crypto currencies almost every day. Here are the most important digital currencies:

SurnamebeginNew blocks (every minute)Money supply
Bitcoin03.01.0910 mins21 million
Namecoin18.04.1110 mins21 million
Litcoin01.10.112.5 minutes84 million
Dogecoin01.12.131 minute99 billion
PPCoin01.08.1210 mins
Peercoin01.08.1210 mins20.9 million
QuarkCoin01.07.1330 seconds246 million
Primecoin01.07.131 minute
NovaCoin01.10.122 to ten minutes
Feathercoin01.04.132.5 minutes26 million
Zetacoin01.08.1330 seconds158 million
Digitalcoin01.05.1320 seconds200 million
Stablecoin01.06.1340 seconds250 million
Infintecoin01.06.1330 seconds9,06 * 10^18
Megacoin01.05.132.5 minutes42 million
Shillingcoin01.01.1410 mins21 million

Overall, there are far more providers. Here is an overview

Risks

The list of cryptocurrencies is getting longer and longer. Everyone has the opportunity to place their own currency. The tools required for this are available online. When everyone throws Hinz and Kunz around with coins, it slowly but surely becomes confusing. That is exactly where one of the problems lies. Acceptance suffers if you don't know today whether the respective currency will still be “en vogue” tomorrow or whether the majority of users will decide on a different solution. A certain standard is required for cryptocurrencies to become the gold of the Internet or the money of the future.

The far greater risk, however, is the price fluctuations. Switching all of your capital into a cryptocurrency in order to be independent of banks can be a huge mess. Then maybe two euros remain from 1,000 euros if the currency is no longer in demand. Or the stock exchange on which you are active files for bankruptcy. The best example is MT. Gox. Then nothing remains or only a fraction of what you once owned. Then there are the dangers that hackers pose. You have already managed to crack a Bitcoin account. To put it in a nutshell: Aside from encryption, there is no security anchor. If a bank goes down the drain, at least in Europe, deposit insurance funds come into play.

opportunities

However, the risks must not completely overshadow the opportunities. Because cryptocurrencies have something for themselves. Digital currencies that only exist as files are predestined for online trading. On site at the bakery or in the pub, Bitcoin, Litecoin and all other cryptocurrencies will probably have a hard time - not only now, but also in the near future. For mail order companies, however, a completely new door is opening. Banks and credit card companies keep their hands open for every transaction. That reduces the profit. There are generally no fees for cryptocurrencies. This is where the great opportunity lies, if the market does not get bogged down in too many currencies. Because no trader will offer dozens of options to choose from and then exchange coins for cash on an exchange. In addition, the state has to play along. Because profits that are not made in euros but in bitcoins are also subject to tax.

Conclusion

As much and as intensively as there is discussion about crypto currencies, one has the impression that it is a tried and tested concept that has long been established on the market. The entire system is still in its infancy. New digital currencies continue to work on the weak points of their predecessors. Be it the distribution of the units or the enormous power consumption from mining. It remains to be seen whether new is better.

Currently, almost everything revolves around Bitcoins, even if the alternatives keep pushing forward. For the time being, speculation and the pursuit of profit are in the foreground, less the basic idea of ​​burying banks. The cryptocurrencies will probably never completely take over the money market. People don't just like to see what they have. You want to pick it up too. In this sense, 20 Bitcoin on the display of the smartphone can only compete with a bundle of euros to a limited extent.

Cryptocurrencies are still very popular. The ongoing hype about Bitcoins, Litecoins and Co. can already be seen in the utopian price increases in recent months and years. It is questionable how long this hype will continue. Without a doubt, investors here have the chance of an extremely profitable return. However, one should be aware of the above-average risk of loss. In addition, a Bitcoin owner does not benefit from the state deposit insurance as with conventional forms of investment. Trading in cryptocurrencies takes place on cyber marketplaces such as Bitcoin.de, Kraken or Anycoindirekt.eu.

Here is an overview of other crypto currencies (as of the end of March 2014), without any guarantee of completeness:

, arouses desire, arouses curiosity and of course also calls critics on the scene. While on the one hand the merits are preached and a complete branch of the economy gradually emerges, doubters see the foundations of the financial system at risk. Even though it's not yet five years old, cryptocurrencies are making for a lot of talk. And since it's all about money, the debate will go on for a long time.