How "Crypto" Currencies work – a brief overview of Bitcoin, Ethereum & Ripple

“Crypto” – or “cryptocurrencies” – are a type of software system that provides transactional functionality to users over the Internet. The most important feature of the system is theirs decentralized nature – usually provided by blockchain database system.

Blockchain and “cryptocurrencies” have recently become key elements of the global spirit of the times; usually as a result of a sharp rise in the “price” of bitcoin. This has led millions to participate in the market, with many bitcoin exchanges under tremendous infrastructural stress as demand grows.

The most important point to understand about crypto is that although it is actually a target (cross-border transactions over the Internet), it does not provide any other financial benefits. In other words, its “inherent value” is firmly limited to the ability to make transactions with other people; NOT in storing / distributing value (which is what most people see).

The most important thing to realize is that Bitcoin and the like are payment networks – NOT “currency”. This will be considered in more detail in a second; The most important thing to realize is that “getting rich” with BTC is not a case of giving people a better economic situation – it’s just the process of being able to buy “coins” at a low price and sell them. higher.

To do this, when looking at “crypto”, you must first understand how it actually works and where its “value” actually lies …

Decentralized payment networks …

As we mentioned, the key thing to remember about “Crypto” is that it’s mostly a decentralized payment network. Consider Visa / Mastercard without the central processing system.

This is important because it highlights the real reason why people have really started to look at the Bitcoin offer in more depth; it allows you to send / receive money from anyone in the world, as long as it has the address of your bitcoin wallet.

The reason this attributes a “price” to the various “coins” is due to the misconception that “Bitcoin” will somehow give you the opportunity to make money because it is a “crypto” asset. Not so.

IN ONLY The way people have made money with bitcoin is due to the “rise” in its price – buying “coins” at a low price and selling them MUCH higher. While it worked well for many people, it was actually based on the “bigger fool theory” – essentially stating that if you can “sell” the coins, it’s a “bigger fool” than you.

This means that if you want to join the “crypto” space today, you are mainly looking to buy one of the “coins” (even “alt” coins) that are cheap (or cheap) and use them, the price goes up, until you sell them later. Since none of the “coins” are backed by real-world assets, there is no way to judge when / if / how this will work.

Future growth

Bitcoin has been used for all purposes and purposes.

The epic rally of December 2017 showed mass acceptance and while its price is likely to continue to rise in the range of $ 20,000+, buying one of the coins today will be a huge gamble that this will happen.

Smart money is already looking at most of the “alt” coins (Ethereum / Riple, etc.), which have a relatively low price but are constantly rising in price and absorption. The key thing to consider in today’s “crypto” space is the way in which the various “platform” systems are actually used.

Such is the rapidly evolving “technological” space; Ethereum & Ripple looks like the next Bitcoin – with a focus on how they can give users the ability to actually use “decentralized applications” (DApps) on their core networks to get functionality up and running.

This means that if you are looking for the next level of “crypto” growth, it will almost certainly come from the various platforms that you can identify there.