of Crypto Currencies

Not centralized

Without any doubt the greatest advantage of Cryptocurrencies in general is that they are decentralized, meaning not emitted and controlled by any central bank. It is free money. It does not describe a cycle with both, its starting and its ending point being a private bank. It challenges the global economic system. It would take less than 10% of the world's population to start using BitCoin instead of their central bank money, and the current system based on debt and interests would cease to exist. The slaves would then be free. Unfortunately, as Goethe said: »no one is more hopelessly enslaved than those who falsely believe to be free.«

No access by Governments

Andreas M. Antonopoulos: Mastering Bitcoin: Unlocking Digital CryptocurrenciesThat means no seizure, no freezing of assets, no control over banking accounts by any government. It is your money, and your money only, and you have the right - and with BitCoin also the power - of keeping the government's nose out of your business.
Governments will come up with absurd laws, because that's what all regimes do when their power starts declining. This will not change anything, though and all those laws will apply to subservient slaves only. All laws that governments may implement concerning cryptocurrencies are futile from the beginning for one simple reason: Governments can only operate based on space and property rights. The property right as we know it today was implemented by the Romans about 2500 years ago. In the world of crypto, this property right is obsolete. And so is space. The blockchain doesn't know either one. That is what makes it impossible for governments to put their hands on it, because they need at least one of the two preconditions in order to be able to operate. If there isn't at least one, all these laws are just about as effective as trying to take down a Linux based network by using a typewriter from 1938, and therefore about as scary as a fluffy rabbit with the word "Boo!" painted on it's little nose. In Cryptoland we can look at our own government the way we look at the North Korean government from outside North Korea. Whatever Kim Yong Ill decides doesn't concern anyone outside North Korea. The exact same applies to whatever your local government decides regarding cryptocurrencies. It doesn't concern anyone in Cryptoland.

No Taxes

For the same reasons stated above, there is no way governments can force you to pay taxes on cryptocurrencies. These kind of assets are not called Cryptocurrencies by chance, for "crypto" comes from Greek "κρυπτός" and means "secret, hidden, concealed, covert". There is no way for any third party to intercept or even find out about Bitcoin transactions, provided the people who make the transaction don't want anybody else to know. Therefore there is no feasible way to implement a Bitcoin taxation system. If done correctly, unless you go and tell your local authority that you own cryptocurrencies there is no way they can find out by themselves and trace them back to you - but what mature person in their right free mind would do something like this? However, BitCoin allows anyone to pay taxes voluntarily.

No counterfitting

Paul Vigna & Michael J. Casey: Cryptocurrency - How Bitcoin and Digital Money are Challenging the Global Economic OrderAll BitCoin trasactions are recorded on the blockchain[1], meaning, that there are multiple redundant copies of the transactions database. This makes BitCoin virtually unforgeable. Let's say someone wants to create a new BitCoin, he would need to reconfirm all the transactions made with that BitCoin, which he can't because no transactions have been made. He also can't just come up with fake transactions, because this wouldn't match the actual transactions that were made, which are documented on the blockchain[1], and of which every user has a copy. What he could do is to check and confirm all the transactions ever made in order to create a new BitCoin. This process is called 'mining', though, and it is intended, because this is the only way how new BitCoins can be generated. That is comparable to somebody who realizes that it's easier to mine gold than to try to transform lead into gold.

No Inflation

BitCoin is a deflationary currency. There will only be about 21 Million BitCoins in the world. They can't be generated arbitrarily, like fiat currencies. BitCoins are mined by using processing power to confirm transactions. This task becomes continuously more complicated, and requires more and more processing power. At a predetermined point in time the number of mined blocks gets "halved". This halving never ceases, which causes the number of BitCoins to approach the number of 21 million, without ever reaching it.

No Tracking

Unless users publicly link their name or organization and their wallet addresses (for example by asking for donations), no one can trace the BitCoins back to them as a person or business. No one other than the wallet owners, will know how many Bitcoins they have, even though any BitCoin address can be easily seen by anyone by simply accessing or All one can see are the trasactions. There is no name associated to it, though. Even if the wallet address was publicized, a new wallet address can be easily generated. This greatly increases privacy when compared to traditional currency systems, where third parties potentially have access to all personal financial data.

Low Transaction Costs

Sending and receiving Bitcoins requires users to keep the Bitcoin client running and connected to other nodes. Essentially, by using Bitcoins users will be contributing to the network, and thus sharing the burden of authorizing transactions. Sharing this work greatly reduces transaction costs, and thus makes transaction costs negligible.

No Risk of “Charge-backs”

Once Bitcoins are sent, the transaction cannot be reversed. Since the ownership address of Bitcoins will be changed to the new owner, once it is changed, it is impossible to revert. Since only the new owner has the associated private key, only he can change ownership of the coins again. This ensures that there is no risk involved when receiving Bitcoins. Once they hit the account, they're at the owner's disposal. A charge back, that is sometimes done with credit cards, is not possible.

Cannot be Stolen

When secured correctly, BitCoins can not be stolen. In order to steal and use them, one needs the private key. Just stealing the hardware where the BitCoins are stored might not be enough. As long as the owner has his private key, he can access his BitCoins from any place he wants. Some people might bring in the case Mt. Gox. What happened in the case of Mt. Gox was, that customers only had their public keys, while the private keys were stored with Mt. Gox. Technically, those BitCoins still belong to the respective users. In order to make any theft impossible, the private key needs to be absolutely secure. Best is to generate an offline account and memorize the private key.
Hardware Wallets like Tresor oder der Nano Ledger S are also an option as long as they are properly backed up. There are more detailed instuctions about how to secure wallets in the chapter "Security".

[1] Think of 'Blockchain' as a digital book keeping ledger where all valid transactions are recorded, and of which every user has an up-to-date copy. Every new transaction (block) is chronologically added to the already existing blocks resulting in a chain of blocks. That's the blockchain. Click here for a detailed explanation of Blockchain.

© 2017 by Markus Besold