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Author Topic: Cryptocurrencies vs stocks  (Read 25 times)
cryptopeter62
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January 10, 2018, 07:00:20 PM
 #1

Hello everyone!

I'm new to the cryptocurrency space and I'll admit, I jumped on the bandwagon as a result of media hype. I bought my first crypto, XRP (~ $200USD worth), right after the new year because of so much media attention, without doing much research. But after reading up on it more, I'm still having trouble wrapping my head around the idea of a crypto token or coin (not specific to ripple and XRP), and ultimately, how it increases in value, so maybe you guys can help me out?

Here is what I know and my thought process (feel free to bash anything I've said incorrectly Smiley):
When you buy a cryptocurrency, you're buying just that, a native cryptocurrency to a particular network, NOT a stake in the underlying company. So how do the coins go up in value? The analogy I keep thinking about is a transit token. If I have all of my city's transit tokens (assuming there's only one transit system), then they're obviously worth a lot of money because I can sell them at whatever price I want. But this doesn't translate into the crypto space because there are so many competing networks/coins that it's probably impossible to create a monopoly, or even oligopoly. And I think one of the major selling points of these projects is that its going to be cost efficient. So I can't see how users would stick around to use the network if the value of the token starts going up.

Also, would the user have to go out in the open market to obtain these coins/tokens or are they provided by the network/company? Does the company buy back the tokens in the open market to continue the use of the network?

I can't help but think that a lot of people are looking at these projects and the value of the coins thinking that they're buying a stake in the company (I'll admit that this happens to me every now and then).

I want to be in this cryptogame for the long run, so please help me understand!

EDIT: total noob here, so mods, feel free to move this post if this isn't in the right forum
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January 13, 2018, 04:43:28 PM
Last edit: January 13, 2018, 07:42:31 PM by cybersofts
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Well, the cryptocurrency market usually values the coin based on the coin demand and supply. It is simply based on demand theory: the high the quantity the lower the price. The people that owns a certain coin are the ones that control the price basically. When there is a new coin in the market and everybody is buying the price would grow higher in terms of value. It is also the same applies to value dropping when a coin value is dropping that means people are selling their coins, instead of buying more.

When you buy a coin e.g. Ripple XRP, and you want exchange with another coin because the value is dropping or you don't like anymore, then you should go to where is called cryptocurrency exchange such as HitBTC, Binance, Bittrex, Kraken, BitFinex and so on. There are many cryptocurrency exchanges out there but here are the few major ones to get you started. Once you have anymore question, free to ask here.
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