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

“Crypto” – or “cryptocurrencies” – are a type of software system that provides users with the functionality of transactions over the Internet. The most important feature of the system is theirs decentralized nature – which it usually provides blockchain database system.

Blockchain and “cryptocurrencies” have recently become major elements of the global zeitgeist; usually as a result of the “price” of Bitcoin in the sky. This has led to millions of people participating in the market, and many “Bitcoin exchanges” have been subjected to enormous infrastructural stresses as demand has grown.

The most important thing to understand about “crypto” is that although it actually serves a purpose (cross-border transactions via the Internet), it does not provide any other financial benefit. In other words, its “intrinsic value” is firmly limited to the ability to make transactions with other people; NOT in preserving / disseminating value (which most people see).

The most important thing you need to understand is that they are “Bitcoin” and the like payment networks – NO “currency”. This will be covered in more detail in a second; the most important thing to understand is that “enrichment” with BTC is not the case to give people a better economic position – it is simply a process of being able to buy “coins” at a low price and sell them more.

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

Decentralized payment networks …

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

This is important because it highlights the real reason why people have really started to consider the Bitcoin proposal more deeply; gives you the ability to send / receive money from anyone around the world, as long as it has your Bitcoin wallet address.

The reason why this attributes a “price” to various “coins” is due to the misconception that “Bitcoin” will in some way give you the opportunity to make money thanks to “crypto” assets. It’s not.

The ONLY The way people made money with Bitcoin was due to the “rise” of its price – buying “coins” at a low price and selling for a MUCH higher price. While many have succeeded, it was actually based on a “bigger fool theory” – basically stating that if you manage to “sell” coins, it’s a “bigger fool” than you.

This means that if you want to connect to the “crypto” space today, you are basically looking to buy any “coin” (even “alt” coin) that is cheap (or cheap) and riding on its price rises until you sell them later . Since none of the “coins” have real assets, there is no way to assess when / if / how this will work.

Future growth

For all intents and purposes, “Bitcoin” is a expended force.

The epic rally in December 2017 heralded mass adoption, and while its price is likely to continue to rise in the $ 20,000 + range, buying one of the coins today will basically be a big gamble to make it happen.

Smart money is already looking at most “alt” coins (Ethereum / Ripple, etc.) that have a relatively low price but are constantly rising in price and adoption. The key thing to look at in a modern “crypto” space is the way different “platform” systems are actually used.

Such is the fast “technological” space; Ethereum and Ripple look like the next “Bitcoin” – with an emphasis on how they can provide users with the ability to actually use “decentralized applications” (DApps) on top of their core networks to get the functionality of the deal.

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