General

How “Crypto” Currencies Work – A Brief Overview Of Bitcoin, Ethereum & Ripple

 

“Crypto” – or”cryptocurrencies” – are a kind of software system which offers transactional functionality to users through the Internet. The most important feature of the system is that their decentralized nature – typically supplied from the blockchain database system.

Blockchain and”cryptocurrencies” have become major elements to the global zeitgeist recently; normally as a consequence of this”price” of Bitcoin skyrocketing. This has lead tens of thousands of individuals to take part in the market, with a lot of the”Bitcoin exchanges” undergoing massive infrastructure stresses as the demand jumped.

The most important point to realize about”crypto” is that although it actually serves a function (cross-border trades through the Internet), it does not supply any other financial advantage. To put it differently, its”intrinsic value” is staunchly limited to the ability to transact with other people; NOT at the storing / disseminating of value (that is what most people see it as).

This may be covered more deeply in another; the most important thing to see is that”getting rich” using BTC isn’t a case of providing people any better economic status – it is simply the practice of having the ability to obtain the”coins” to get a low price and sell them greater.

To this end, when looking at”crypto”, you need to first understand how it really functions, and where its”value” really lies…

Decentralized Payment Networks…

As previously mentioned, the key point to keep in mind about”Crypto” is that it’s predominantly a decentralized payment system. Think Visa/Mastercard without the central processing system.

This is significant as it highlights the real reason people have really began looking into the”Bitcoin” proposition more profoundly; it gives you the capability to send/receive cash from anybody around the world, so long as they’ve your Bitcoin wallet speech.

The main reason why this features a”price” to the different”coins” is because of the misconception that”Bitcoin” will somehow provide you with the capability to make money by virtue of becoming a”crypto” strength. It doesn’t.

The ONLY way that people have been making money with Bitcoin has been due to the”rise” in its cost – purchasing the”coins” for a low price, and selling them to get a MUCH higher one. Whilst it worked out well for many folks, it was really based off the”greater fool theory” – essentially saying that in the event that you manage to”sell” the coins, then it is to a”greater fool” compared to you.

This implies that if you are seeking to get involved with all the”crypto” space now, you’re essentially looking at buying any of the”coins” (even”alt” coins) which are economical (or inexpensive), and riding their price rises before you sell them off later on. Since not one of the”coins” are endorsed by real-world resources, there is not any method to quote when/if/how this will work.

The epic dive of December 2017 indicated mass adoption, and whilst its price will likely keep growing into the $20,000+ scope, purchasing one of the coins today will essentially be a huge bet that this will happen.

The wise money is already looking at the vast majority of”alt” coins (fintechwriters/Ripple etc) which have a comparatively modest price, but are continually growing in adoption and price. The key point to check at in today’s”crypto” space is the way in which the different”platform” systems are now being used.