People who work in the cryptocurrency space have a good understanding of how it works, but outside of the industry, it's a bit of a muddled mystery. Above I've attempted to illustrate how it works, with progressively larger circles of less decentralization. Some parts of the industry are closely linked to the core protocols, and others, such as merchants, exchanges, and custody services, are quite a bit further away from the decentralized core of how cryptocurrency works.

This diagram illustrates why many people have the wrong idea about crypto. There are many different processes, businesses, and systems - all of them are within the big tent of cryptocurrency, but they are not all alike. The ones further out are less core to the system. The ones further out are also usually where the frauds, hacks, and scams happen. This can give the other circles a bad name in the press, which is frustrating for the people who work closer to the protocol and understand how the pieces fit together.

The key to understanding the above diagram is that decentralization comes in degrees. That doesn't mean something is good or bad, because many not-so-decentralized parts of the ecosystem, like exchanges, are very essential to the overall system. But it is important to understand that the pieces are not alike.

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The above diagram can be downloaded using this link: