Cryptocurrencies are the newest ‘big thing’ in the digital world and are now known as part of the financial system. In fact, it is tagged by enthusiasts as a ‘money revolution’.
In clear terms, cryptocurrencies are decentralized digital assets that can be exchanged among users without the need for a central authority, most of which is done through special computing methods that referred to as ‘mining’.
Acceptance of currencies, such as the US Dollar, the Great British Pound and the Euro, is considered legal tender because it is issued by a central bank; Digital currencies, however, like cryptocurrencies, do not rely on the trust and public trust of the issuer. As such, many factors determine its value.
Factors Determining the Value of Cryptocurrency
Principles of Free Market Economy (Basic Demand)
Issuance is a key determinant of the value of anything of value, including cryptocurrencies. This is because if many people are willing to buy a cryptocurrency, and others are willing to sell, the price of a specific cryptocurrency will increase, and vice versa.
Adoption of the masses
Many adopt any cryptocurrency can shoot its price in a month. This is due to the fact that many cryptocurrencies have their supply bounded at a certain limit and, in accordance with economic principles, an increase in demand without a corresponding increase in supply will lead to an increase in the price of a particular palaliton.
Many cryptocurrencies have invested in a number of resources to ensure their adoption, with some focusing on using their cryptocurrency to facilitate personal life issues, as well as important day-to-day operations. case, with the intention that it is very necessary in everyday life.
If a fiat currency, such as USD or GBP, grows, the price will rise and the purchasing power will fall. This is why cryptocurrencies (let’s use Bitcoin as an example) to increase respect for that fiat. The result is that you get more of that fiat per bitcoin. In fact, this situation is a major factor in the rise in the price of Bitcoin.
Scams and Cyber Attack History
Scams and hacks are also a major factor affecting the value of cryptocurrencies, as they are known to cause wild changes in purchases. In some cases, the team behind a cryptocurrency may be scammers; they pump up the price of the cryptocurrency to attract unsuspecting individuals and if their hard-earned money is invested, the price is lowered by the scammers, who then disappear without a trace.
Therefore it is important to be wary of cryptocurrency scams before investing your money.
Other factors considered, which have an impact on the value of cryptocurrencies, include:
How cryptocurrency is stored, as well as its use, security, ease of cross-border acquisition and acceptance
Community-backed cryptocurrency support (including funding, innovation and loyalty of its members)
Low risk cryptocurrency risk as seen by investors and users
Feel the news
Market melting and cryptocurrency injury
Country regulations (including banning cryptocurrency and ICOs in China and accepting them as legally soft in Japan)