I understand the fundamentals and I mine It myself but there was one problem that my dad pointed out that caught my attention. That is the fact that most (almost all ) current cryptocurrencies don't have a physical item like gold with a high value that is backed by it, currently the only thing that gives a cryptocurrency its value is either supply/demand or the service that the coin provides. This is also one of the reasons that I personally believe is causing another factor of insecurity which leads to these huge Fluctuations in the prices of these coins, i'm not saying that this is a bad thing but I think that future and/or current crypto currencies have to invest in other physical methods to give it a more stable value instead of using ETH (ethereum) to determine the coins value.
(This is just my thoughts on current cryptocurrencies)
What gives dollars value? The vast majority of dollars are just bits in a computer bank, too.
Anonymity (even if merely pseudo-anonymity) and independence from government banking systems are commodities, just not tangible goods. Your hard drive storing your wallet is a tangible good. Code is a product with tangible value to people.
interesting idea..
however the banks operate under a fractional reserve system. Say you have left your hard earned cash in a deposit the banks go and lend that money to someone else.
Its highly possible that you could one day try to withdraw you money and they will turn around and say we don't have it. In any other industry this would be a CRIME!!
Crypto currencies are backed by the proof of work and proof of stake miners that expend electricity or resources to secure the blockchain.
Compare this to the USD in which the US government has a 20 TRILLION dollar debt and keeps paying its own debts by creating money out of thin air. Again this would be illegal in any other environment.
I know which method I put my faith in.
http://www.investopedia.com/terms/f/fractionalreservebanking.asp http://www.usdebtclock.org/