A Brief Explanation Of The Idea Behind Crypto-Currencies
A person that isn’t proficient in the realm of virtual payment methods can easily get confused trying to understand the concept and principles of operation of cryptocurrencies. Let’s try to buy bitcoin with a credit card. In its essence, any cryptocurrency represents a set of protocols enabling transaction validation between two parties. No third party is needed, thus the transaction isn’t participated by an intermediary, such as a credit card company or bank.
Innovative and ground-breaking as they are, cryptocurrencies may become an influential factor not only in the market of finances, but in the large-scale economy as well. Their potential to cut down transaction costs will result in more customers having the opportunity to use financial transactions. Moreover, cryptocurrencies enable their users to avoid the disadvantages characteristic of some traditional monetary systems.
As determined by the idea of market relations, supply and demand are the two factors on which the worthiness of a given cryptocurrency depends. In this regard, a parallel is often drawn between precious metals and crypto-currencies, which is why the latter are sometimes called “virtual gold.” When a cryptocurrency gains popularity and a larger pool of users, its value surges right along.