HOME
Home » Cryptocurrency » How Does Cryptocurrency Gain Value?

How Does Cryptocurrency Gain Value?

How Does Cryptocurrency Gain Value? is one of the best articles about Cryptocurrency. There are lots of articles on the web that examine Cryptocurrency, How Does Cryptocurrency Gain Value? one of which we recommend for you. Ideally the articles that we present below may be helpful, raise knowledge and be described as a alternative for you.

Cryptocurrencies are the latest ‘big thing’ in the digital world and have now been recognized as being part of the monetary system. In fact, enthusiasts have tagged it as ‘the revolution of money’.

In clear terms, cryptocurrencies are decentralized digital assets that can be exchanged between users without the need for a central authority, the majority of which being created via special computation techniques referred to as ‘mining’.

The acceptance of currencies, like the US Dollar, Great British Pound and the Euro, as legal tender is because they have been issued by a central bank; digital currencies, however, such as cryptocurrencies, are not reliant on the confidence and trust of the public on the issuer. As such, several factors determine its value.

Factors that Determine the Value of Cryptocurrencies

Principles of Free Market Economy (Mainly Supply and Demand)

Supply and demand is a major determinant of the value of anything of value, including cryptocurrencies. This is because if more people are willing to buy a cryptocurrency, and others are willing to sell, the price of that particular cryptocurrency will increase, and vice versa.

Mass Adoption

Mass adoption of any cryptocurrency can shoot its price to the moon. This is due to many cryptocurrencies having their supply capped at a particular limit and, according to economic principles, an increase in demand without a corresponding increase in supply will lead to a price increase of that particular commodity.

Multiple cryptocurrencies have invested more resources to ensure their mass adoption, with some focusing on the applicability of their cryptocurrency to pressing personal life issues, as well as crucial day-to-day cases, with the intention of making them indispensable in everyday life.

Fiat Inflation

If a fiat currency, like the USD or GBP, becomes inflated, its price rises and its purchasing power drops. This will then cause cryptocurrencies (let’s use Bitcoin as an example) to increase with respect to that fiat. The result is that you will be able to acquire more of that fiat with each bitcoin. In fact, this situation has been one of the major reasons for Bitcoin’s price increase.

Scams and Cyber Attack History

Scams and hacks are also core factors affecting the value of cryptocurrencies, as they are known to cause wild swings in valuations. In some cases, the team backing a cryptocurrency may be the scammers; they’ll pump the price of the cryptocurrency to attract unsuspecting individuals and when their hard-earned money is invested, the price is shortened by the scammers, who then disappear without a trace.

It is therefore imperative to be careful of cryptocurrency scams before investing your money.

Some other factors to consider, that have an impact on the value of cryptocurrencies, include:

  • Manner in which the cryptocurrency is stored, as well as its utility, security, ease of acquisition and cross-border acceptability
  • Strength of the community backing the cryptocurrency (this includes funding, innovation and the loyalty of its members)
  • Low associated risks of the cryptocurrency as perceived by investors and users
  • News sentiment
  • Market liquidity and volatility of the cryptocurrency
  • Country regulations (this includes the ban of cryptocurrency and ICOs in China and its acceptance as legal tender in Japan)

Therefore this article with the concept of How Does Cryptocurrency Gain Value?, that people share and is extracted from numerous places on the internet. You may get more different related posts on the type site Cryptocurrency.

Related Posts :

How to Find Cryptocurrency Predictions?

How to Find Cryptocurrency Predictions? is one of the best posts about Cryptocurrency. There are many posts on the web that examine Cryptocurrency, How to Find Cryptocurrency Predictions? one of which we recommend for you. Hopefully the articles that we convey... Read More

How Cryptocurrency Trading Software Is Helping To Grow Your Crypto Platform

How Cryptocurrency Trading Software Is Helping To Grow Your Crypto Platform is one of the greatest articles about Cryptocurrency. There are many articles on the web that discuss Cryptocurrency, How Cryptocurrency Trading Software Is Helping To Grow Your Crypto Platform certainly... Read More

Everything You Need To Know About ICOs

Everything You Need To Know About ICOs is one of the finest posts about Cryptocurrency. There are numerous posts on the net that discuss Cryptocurrency, Everything You Need To Know About ICOs among which we recommend for you. Ideally the articles... Read More

The Best Books on Cryptocurrency

The Best Books on Cryptocurrency is one of the finest articles about Cryptocurrency. There are many posts on the net that discuss Cryptocurrency, The Best Books on Cryptocurrency certainly one of which we suggest for you. Ideally the posts that people... Read More

How to Use a Free Bitcoin Generator

How to Use a Free Bitcoin Generator is one of the best posts about Cryptocurrency. There are lots of posts on the web that discuss Cryptocurrency, How to Use a Free Bitcoin Generator among which we recommend for you. Preferably the... Read More