How "Crypto" Currencies at Work – A Brief Overview of Bitcoin, Ethereum and Ripple

“Crypto” – or “cryptocurrencies” – is a type of software system that provides transaction 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 “crypto-currencies” have recently become staples of the global zeitgeist; usually as a result of Bitcoin’s “price” skyrocketing. This led to millions of people participating in the market, with many “Bitcoin exchanges” experiencing massive infrastructure stresses as demand surged.

The most important thing to understand about “crypto” is that while it does indeed serve a purpose (cross-border transactions over the Internet), it provides no other financial benefit. In other words, its “intrinsic value” is strictly limited to its ability to transact with other people; NOT in storing/propagating value (that’s how most people see it).

The most important thing to understand is “Bitcoin” and the like payment networks – NOT “Currencies”. This will be covered in more depth in a second; the most important thing to understand is that “getting rich” with BTC is not about making people better off economically – it’s just a process of buying “coins” at a lower price and selling them at a higher price.

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

Decentralized Payment Networks…

As mentioned, the main thing to remember about “Crypto” is that it is basically a decentralized payment network. Think Visa/Mastercard without the central processing system.

This is important because it highlights the real reason why people are really starting to dig deeper into the Bitcoin proposition; it allows you to send/receive money from anyone anywhere in the world, as long as they have your Bitcoin wallet address.

The reason this is attributed to the “price” of the various “coins” is due to the misconception that Bitcoin, being a “crypto” asset, will allow you to make money. No way.

The ONLY The reason people make money with Bitcoin is because of its price “revaluation” – buying “coins” at a low price and selling them at a higher price. While it worked well for many people, it was actually based on the “bigger idiot theory” – essentially stating that if you manage to “sell” the coins, it will be “dumber” than you.

This means that if you want to get involved in the “crypto” space today, you basically buy any “coins” (even “alt” coins) that are cheap (or cheap) and let them go up in price until you sell them later. None of the “coins” are backed by real world assets, no way to predict when/if/how this will work.

Future growth

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

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

The smart money is looking at most of the “alt” coins (Ethereum/Ripple, etc.) that already have a relatively small value but are steadily growing in value and adoption. The main thing to look at in the modern “crypto” space is the way the various “platform” systems are actually used.

This is a fast-growing “tech” space; Ethereum and Ripple appear to be the next “Bitcoin” – focusing on the way they can provide users with the ability to use “decentralized applications” (DApps) on their main networks to gain functionality. work

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