How Crypto Currencies Work - A Brief Overview Of Bitcoin, Ethereum & Ripple

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

“Crypto” – or “cryptocurrency” – is a type of software system that provides transaction functions to users over the Internet. The most important characteristic of these systems is their decentralized nature – usually provided by blockchain database systems.

Blockchain and “cryptocurrencies” have recently become the most elements of the worldwide zeitgeist; usually as a results of the skyrocketing Bitcoin “price”. This has resulted in millions of people participating in the market, with many “Bitcoin exchanges” facing massive infrastructure stress due to increasing demand.

The most important thing about “crypto” is that while it has an actual purpose (cross-border transactions over the Internet), it offers no other financial benefit. In other words, its “intrinsic worth” is strictly limited to the ability to do business with other people; NOT in the store of value / spread (which most people see).

The most important thing you need to know is that “Bitcoin” and the like are payment networks – NOT “currencies”. This will be covered in more detail in a second; Most importantly, BTC is not about “getting rich” about putting people in better economic positions – it is simply a process of buying “coins” at low prices and selling them higher.

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

Decentralized payment network …

As already mentioned, the main thing to note with “Crypto” is that it is mainly a decentralized payment network. Think of Visa / Mastercard without a central processing system.

This is important because it highlights the real reason people are really starting to dig into the “Bitcoin” offering; This gives you the ability to send / receive money from anyone around the world as long as they have your Bitcoin wallet address.

The reason this associates “price” with various “coins” is because of the false assumption that “bitcoin” somehow gives you an opportunity to make money by becoming a “crypto” asset. No.

The ONLY way to make money with Bitcoin is for the price to “go up” – buy “coins” at a low price and sell them at a MUCH higher price. While this worked well for a lot of people, it was actually based on the “bigger stupid theory” – basically it said that if you managed to “sell” a coin, it had been a “stupid person” than you.

That said, if you want to get into the “crypto” space today, you basically want to buy one of the “coins” (even the “alt” coins) that are cheap (or cheap) and get them in price until you sell them later. Since there is no “coin” backed by real world assets, there is no way of predicting when / if / how this will work.

Future growth

In all respects, “Bitcoin” is energy consumed.

The December 2017 epic rally was received en masse, and while the price is likely to continue to climb into the more than $ 20,000 range, buying any of the coins today is basically going to be a huge risk for it to happen.

Smart Money is already seeing most of the “old” coins (Ethereum / Ripple etc) that have relatively low prices but continue to rise in price and acceptance. In the modern “crypto” space, the most important thing to consider is the way in which different “platform” systems are actually used.

This is the fast moving “technology” 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) in addition to their underlying network in order to get functional features.

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