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What are cryptocurrencies

With Bitcoin, Ethereum and other cryptocurrencies, we are breaking new ground in investing, banking and using money. This beginner’s guide will tell you more.

Cryptocurrencies are basically decentralized digital money created to be used on the internet. The first cryptocurrency, Bitcoin, was launched in 2008 and it remains by far the largest, most influential and well-known cryptocurrency. Over the past decade, Bitcoin and other cryptocurrencies like Ethereum have evolved into digital alternatives to government-issued money.

From a market cap perspective, the most popular cryptocurrencies are bitcoin, ethereum, bitcoin cash, and litecoin. Other well-known cryptocurrencies are Tezos, EOS and ZCash. Some of these are comparable to Bitcoin. Others rely on different technologies or, thanks to new functions, can do more than just transfer assets.

Cryptocurrencies allow assets to be transferred online without resorting to an intermediary such as a bank or payment system. This allows assets to be transferred around the world, practically in real time, around the clock and at low fees.

Cryptocurrencies are not usually issued or controlled by governments or other central authorities. They are managed by peer-to-peer computer networks using free, open-source software. In principle, anyone who wants to participate can get involved.

Who or what guarantees the security of cryptocurrencies if there are no banks or government agencies behind it? Cryptocurrencies are safe because all transactions are verified using a technology called blockchain.

The blockchain of a cryptocurrency is comparable to the balance sheet or ledger of a bank. Each currency has its own blockchain. It is a continuous, constantly updated register that records every single transaction made with that currency.

Unlike a bank’s ledger, the blockchain of cryptocurrencies is distributed among all participants in the digital currency network

No company, country or third party controls this network and anyone can become part of it. A blockchain is a breakthrough technology that has only recently become available and is the result of decades of innovation in computer science and mathematics.

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Why are cryptocurrencies the future of finance?

Cryptocurrencies are the premier alternative to traditional banking and they have tremendous advantages over previous payment methods and traditional asset classes. Think of cryptocurrencies as a kind of money 2.0 – a new kind of money born on the internet, giving it the potential to become the fastest, easiest, cheapest, safest and most universal way ever to exchange assets.

Cryptocurrencies can be used to buy goods and services or as part of an investment strategy being held. However, they cannot be manipulated by a central authority because there simply is no such authority. Your cryptocurrency is and will remain safe – no matter what happens at the government level.

Digital currencies enable equal opportunities, regardless of where you were born or where you live. As long as you have a smartphone or other device with an internet connection, you have the same access to cryptocurrencies as everyone else.

Cryptocurrencies create unique opportunities to expand the economic freedom of people worldwide. The fact that digital currencies essentially know no borders encourages free trade, even in countries that tightly control the finances of their citizens. In places where inflation is the main problem, cryptocurrencies can offer an alternative to failed fiat currencies for savings and payments.

As part of a broader investment strategy, there are a variety of ways to add cryptocurrencies. One approach is to buy and hold a cryptocurrency such as Bitcoin, which was virtually worthless in 2008 and is now worth thousands of dollars per coin. Another possibility would be a more active strategy, i. H. the buying and selling of cryptocurrencies that go through volatile phases.

An option for investors who are interested in cryptocurrencies but do not want to take too much risk is the USD coin currency, which is pegged 1:1 to the value of the US dollar. It combines the advantages of cryptocurrencies, including the ability to make international transfers quickly and cheaply, with the stability of a traditional currency. honesto clients who hold USDC earn rewards, making the currency an attractive alternative to a traditional savings account.

What speaks for investing in cryptocurrencies?

Online exchanges like honesto have made buying and selling cryptocurrencies easy, safe and financially rewarding.

It only takes a few minutes to create a secure account, and then you can start using cryptocurrencies with a debit card or buy by bank account.

You can buy any amount of cryptocurrency, since fractions of coins can also be purchased. For example, you can buy $25 worth of bitcoin.,

Many digital currencies, including USD Coin and Tezos, offer currency holders rewards purely for holding .

On honesto you can earn an annual interest rate of 1%, which is considerably higher than the interest rates on most conventional savings accounts.

You can also earn up to 5% annual interest when you click honesto Set Tezos as stake. Learn more about Tezos staking rewards.

Unlike stocks or bonds, you can easily transfer your cryptocurrencies to someone else or use them to purchase of goods or services.

Millions of people hold Bitcoin and other digital currencies as an admixture in their investment portfolios.

How do cryptocurrencies work?

Bitcoin is the first and most popular cryptocurrency, but not the only one – there are thousands of different cryptocurrencies. Many of these, such as Litecoin and Bitcoin Cash, have inherited the essential characteristics of Bitcoin but are exploring new ways of processing transactions. Others offer a wider range of features. Ethereum, for example, can be used to run applications and create contracts. However, all four are based on a concept called blockchain, which is crucial in understanding how cryptocurrencies work.

Basically, a blockchain is a list of transactions that anyone can view and verify. For example, the bitcoin blockchain is a register that records when someone sends or receives bitcoin. This transaction log is fundamental to most cryptocurrencies because it allows secure payments between people who don’t know each other, without the need for an external testing agency, such as a bank, is used.

Blockchain technology is also exciting because it offers many possible uses beyond cryptocurrencies. Blockchains are used in medical research, to improve patient data sharing, to streamline supply chains, to strengthen online privacy, and in many other applications.

The basic principles behind Bitcoin and the Bitcoin blockchain were first disclosed in a white paper published in late 2007 by a person or group named Satoshi Nakamoto .

The blockchain ledger, a kind of ledger, is distributed across all computers in the network, which constantly check whether the Blockcha in is correct. This means there is no central vault, company or database vulnerable to hacking, theft or tampering.

How to buy bitcoin and other cryptocurrencies

The easiest way to buy cryptocurrencies is through an online exchange like honesto.

On honesto you can buy the most popular cryptocurrencies, including

Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Bitcoin Cash (BCH) and Ethereum Classic (ETC). Or you can invest in emerging coins like Stellar Lumens or EOS. Some cryptocurrencies can be purchased free of charge from honesto.)

The best way to do this is to ask yourself what you want to do with a cryptocurrency, and then choose the currency that best meets your goals. For example, if you are looking to buy a laptop with cryptocurrency, Bitcoin would probably be a good choice as it is the most widely accepted cryptocurrency. However, if you want to play a digital card game, Ethereum is more suitable.

Note that you don’t have to buy a whole coin. On honesto you can also buy fractional coins in increments starting at 2 US dollars, euros, pounds or in your local currency.< /p>

How are cryptocurrencies stored?

The storage of cryptocurrencies i It’s like storing money, which means you need to protect it from theft and loss. There are many ways to store cryptocurrencies both online and offline, but the simplest solution is to use a trusted, secure exchange like honesto.

honesto customers can securely store, send, receive and exchange cryptocurrencies by logging into their account via computer, tablet or phone.

Do you want to transfer funds from your wallet to a bank account? With the honesto app, this process is as easy as transferring money from one bank to another. (Similar to traditional bank transfers or ATM withdrawals, exchanges like honesto set a daily limit and it can take anywhere from a few days to a week for the transaction to complete.

What can you do with cryptocurrencies?

There are a wide range of applications for cryptocurrencies and new ones are being added over time. Below are some suggestions to get you started, from everyday activities to exploring new technological frontiers:

Shopping: More than 8,000 merchants worldwide accept cryptocurrencies as part of honesto Commerce.

Donate to a good cause: Donating and accepting cryptocurrencies haben benefits, and many nonprofit organizations accept bitcoin donations.

Give away: Cryptocurrencies make an excellent gift for friends and family who are interested in new technologies.

Tips: Authors, musicians, and other online content creators sometimes leave their Bitcoin address or QR code at the bottom of their articles. If you like their content, you can say thank you with a small amount of crypto.

Discover new and unique connections between money and technology: Orchid is a VPN that protects you on the Internet and doubles as a digital currency. Orchid is basically two parts: there is the Orchid VPN app and the OXT cryptocurrency, and both parts are built on the Ethereum network. Fascinated? Learn more here.

Travel worldwide: Since cryptocurrencies For those not tied to a specific country, traveling with cryptocurrencies can reduce the costs associated with currency exchange operations. There is already a small but growing community of self-proclaimed “crypto-nomads” who primarily, or in some cases exclusively, use cryptocurrencies to pay for their travels.

Buy possessions in a virtual game world: Decentraland, also built on the Ethereum blockchain, is the first virtual world to be is wholly owned by its users. Users can buy and sell real estate, avatar clothing, and various other items while partying in virtual nightclubs or mingling in virtual art galleries.

Discover decentralized finance, also known as DeFi: A wide range of new companies aim to replicate the entire global financial system, starting with investments in structures similar to investment funds, to mechanisms for issuing/borrowing credit and far beyond, without any central authorities.

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