Under Standing Cryptocurrency: Blockchain, Bitcoin, Etherium, Ripple, Litecoin

When I started here on STEEMIT, it's my first time to encounter Cryptocurrency and I don't have any clue of what's the value of crypto-currency and why it is becoming popular all over the world and is used by many nations already.
To understand crypto-currency, I took some research and studies of what is it all about. What is it's value and why people making a lot of money trading cryptocurrencies or even get paid through it.

I hope that this will help many fellow-Steemians on understanding crypto-currency.

Overview on Cryptocurrency

First, some of who will be able to read this have more knowledge in crypto-currency than me, so please let's help one another. I believe that having more knowledge in crypto-currency will open opportunities to others.
I'm going to start with the basic so some of the information may know already and some may not.

What is Cryptocurrency?

A cryptocurrency is a chain of digital signatures stored on a decentralized public ledger known as a blockchain.
Having a cryptocurrency means having a private key (similar to a password) giving the holder the ability to transfer the cryptocurrency to someone else. Private keys are stored in digital wallets.
Cryptocurrencies are transferred from one owner to another by adding a transaction to the blockchain.

Trading cryptocurrencies is not quite a zero sum game; it is best described as an almost zero sum game.
What do you mean by the term Zero Sum Game?
Is that all possible outcomes’ individual statistical likelihood when combined must equal 100% as there is no in-between.
For example: If one were to flip a coin there would be a 50% chance of heads and a 50% chance of tails, that would be a Zero Sum Game as there is no in-between and all outcomes equal 100% ie 50% plus 50%.
Put another way there are participants/position holders on either side/direction of a trade, be it Long or Short and the gain on one side represents a loss on the other.
What this also means is the net change in one participant's wealth is equally matched by that opposite change in another’s wealth i.e. the net change in total wealth among participants is zero, the wealth is just shifted from one to another.
For you to win, another/s must equally lose and vice versa.

Bitcoin

Bitcoin is the head of the cryptocurrency pack. Its current market cap is USD 65 billion. The Bitcoin blockchain provides a decentralized peer-to-peer electronic cash system. Critics could say bitcoin has no intrinsic value, arguing it is a financial asset whose monetary value is entirely derived from people’s perception and, unlike fiat currencies, it has no central bank reserves backing.

Ethereum

Ethereum is the second most popular cryptocurrency and the leading system for Blockchain-As-A-Service. Like Bitcoin, it provides a decentralized peer to peer electronic cash system. Unlike Bitcoin, Ethereum allows for the creation of smart contracts (i.e. programming code that auto-executes once certain conditions are fulfilled). And unlike Bitcoin, with Ethereum developers can build and deploy decentralized applications (e.g. an Ethereum-based decentralized Facebook).

Ripple

Ripple is the catchall name for the cryptocurrency platform, the transactional protocol for which is actually XRP, in the same fashion as Ethereum is the name for the platform that facilitates trades in Ether. Like other cryptocurrencies, Ripple is built atop the idea of a distributed ledger network which requires various parties to participate in validating transactions, rather than any singular centralized authority. That facilitates transactions all over the world, and transfer fees are far cheaper than the likes of bitcoin. Unlike other cryptocurrencies, XRP transfers are effectively immediate, requiring no typical confirmation time.

Litecoin

Litecoin is based on the same open source code behind bitcoin, with some notable differences. Created by engineer Charlie Lee to be the silver to bitcoin's gold, one of the main disparities between the two cryptocurrencies lies in their transaction speeds. It generates blocks about four times faster than bitcoin, litecoin can confirm the legitimacy of transactions a lot quicker as well as process a much higher number of them over the same time frame.

While bitcoin has a limit of 21 million coins, litecoin will max out at the 84 million mark.

The rise and fall of the value of Cryptocurrecny

If there are more potential buyers than sellers, those participants who wish to sell would be more inclined to hold out for higher offers from those buyers which results in an uptrend. If there are more sellers wishing to liquidate, then those looking to enter will wait for a lower price. This is a very basic definition to illustrate the point.

Let’s look at it another way – supply and demand – which we will examine in much more detail. Supply is those financial positions people want to sell and demand is those that people are looking to buy.
When there is a great imbalance between the two, prices will tend to move in favour of the stronger until a new price equilibrium is reached.
This may be due to fair adjustment price wise and/or the fact one or both sides will make the relevant adjustments based on the supply and demand shift – for example increasing/decreasing production and/or purchasing more/less dependent on the circumstances.
It is also worth remembering that for some items increasing the supply may not be possible either instantly or in the immediate future for example Gold, a nation’s currency, a crop etc.
The greater the disparity between supply and demand - the larger the potential move. Hence price gives you an insight into the emotional state of all parties involved – their confidence, their opinion, their will as exercised by their very trading.

That's it for now until the next lesson two. Thank you for taking time to read this content.

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