Bitcoin, cryptocurrency & blockchain: What is that?! Course and trading explained

Cryptocurrencies and Bitcoin are no longer dispensable from the modern investor’s portfolio — yet between hype, crash headlines, and blockchain buzzwords, many investors lose sight of the bigger picture. This guide explains soberly how Bitcoin and cryptocurrencies work, how trading proceeds, what tax regulations apply in Germany, and — crucial for Lukinski readers — how crypto compares directly to classic real estate as an investment. In addition, you’ll find strategies for secure storage, a complete cost and risk check, as well as a FAQ with the most important investor questions. Deep dive: Cryptocurrency — 3 Investor Strategies.

Bitcoin, Blockchain & Cryptocurrency — the basics

Cryptocurrencies are digital assets that are cryptographically secured and decentralized, managed through a peer-to-peer network. There is no central bank, no tax authority, and no single server controlling the system. Instead, every transaction is stored in a public, tamper-proof database — the blockchain — and validated by a network of thousands of computers worldwide.

What makes Bitcoin unique?

Bitcoin (BTC) is the first and by far the largest cryptocurrency. Unlike fiat money (Euro, Dollar), the amount is mathematically limited:

• Maximum of 21 million BTC — no person or institution can create more
• Halving every four years — the reward for miners is halved, reducing inflation
• Decentralized — no single point of failure, no possibility of being “shut down”
• Pseudonymous — wallet addresses are public, but not directly linked to individuals
• Available globally — 24/7, without bank hours or weekends

This scarcity makes Bitcoin a “digital gold” for many investors — comparable to precious metals, but more divisible (down to 0.00000001 BTC, known as a Satoshi) and globally transferable.

Blockchain in simple terms

A blockchain is a continuous chain of data blocks, in which each new block is cryptographically linked to the previous one. If someone wanted to alter an old entry, they would have to simultaneously change all subsequent blocks on the majority of network computers — practically impossible.

• Block — a data package containing transactions (e.g., “Address A sends 0.5 BTC to Address B”)
• Hash — a cryptographic checksum that uniquely identifies each block
• Consensus — the majority of nodes must confirm a transaction before it becomes valid
• Immutability — once stored data cannot be reversed

The principle is universally applicable — from currencies via land registries to land registry entries: First pilot projects in Switzerland and Sweden are already testing whether real estate ownership relationships can be represented via blockchain.

Bitcoin vs. Real Estate as an Investment — the direct comparison

For Lukinski readers, this is the central question: How does BitCoin perform compared to a classic rental property? The truth lies in the mechanisms — both asset classes have fundamentally different characteristics.

Which strategy fits which investor?

• Cashflow-oriented investor — Real Estate clearly beats crypto. Monthly rents, predictable cash flow, tax depreciation
• Growth-oriented investor with risk tolerance — small crypto allocation (5 – 10 % of the portfolio) as an asymmetric investment
• Wealth building with leverage — clearly real estate. No other asset allows 80 – 90 % debt at historically favorable building interest
• Mobile wealth across borders — crypto is unbeatable (wallet on a USB stick is travel-friendly, real estate is location-bound)
• Tax optimization through holding — real estate highly optimizable through Real Estate Holding or Share Deal

Crypto taxes in Germany — what investors need to know

Der größte Unterschied zu klassischen Anlagen: Krypto wird in Deutschland nicht als Wertpapier, sondern als “anderes Wirtschaftsgut” behandelt (§ 23 EStG). Das hat Vor- und Nachteile.

The most important tax rules at a glance

• Speculation period 1 year — whoever holds BitCoin for longer than 12 months and then sells it, pays no taxes on the profit
• Deduction limit 1,000 EUR (since 2024, previously 600 EUR) — earnings below are completely tax-free, from the first euro above it the entire amount is taxed
• FIFO-Methode — First In, First Out: zuerst gekaufte Coins gelten als zuerst verkauft
• Personal tax rate — Crypto gains are taxed at the individual income tax rate (up to 45% plus solidarity surcharge)
• Trading is selling — anyone exchanging BTC for ETH triggers a taxable event
• Staking/Lending — die Frist verlängert sich je nach Auslegung; aktuell gilt nach BMF-Schreiben weiterhin 1 Jahr, frühere Regelungen mit 10 Jahren wurden gekippt

Comparison: Crypto Tax vs. Real Estate Tax

Insider Tip: Those who combine crypto and real estate can strategically use both control regulations — realize crypto gains tax-free after 12 months, reinvest the proceeds into real estate, and there optimize long-term through depreciation + 10-year period. More about the interplay via the Real Estate Holding.

How to Buy BitCoin? Step-by-Step Guide

Getting started today is much easier than just a few years ago — at the same time, the stumbling blocks have become more hidden. A structured approach:

Step 1 — Choose a Platform

• German/EU Exchanges (e.g. BISON, Bitvavo, Bitcoin.de) — BaFin-regulated, German support, tax reports compatible
• International Exchanges (e.g. Kraken, Coinbase, Binance) — larger selection, but partly located in tax havens, limited legal security
• Brokers with Crypto CFDs — no actual coin ownership, only speculation on price movement, unsuitable for long-term investors
• Bitcoin-ATMs — rare, high fees (5 – 10 %), only useful for small amounts

Step 2 — Verification (KYC)

Since the EU Anti-Money Laundering directives, anonymous trading is no longer possible. Required:

• Email address with verification link
• Mobile number with SMS code (often also 2-factor authentication)
• Identification via ID card, passport or driver’s license (video ID or photo upload)
• Proof of address (residence certificate or bank statement for larger amounts)
• Control ID (for CRS reporting to the tax office)

Step 3 — Deposit

• SEPA transfer — cheap (often free), but takes 1 – 3 business days
• Instant transfer / SEPA Instant — immediate, sometimes a small fee
• Credit card — immediate, but 2 – 4 % fee
• PayPal — available at few providers, high fees

Step 4 — Execute purchase

• Market Order — immediately at the current price
• Limit Order — only at a specified price (for tactical entry)
• Sparplan / DCA — Dollar-Cost-Averaging, automatischer Wochenkauf gleicher Be