Cryptocurrencies are the latest ‘big thing’ in the digital world and are now recognized as part of the monetary system. In fact, fans have dubbed it the ‘Money Revolution’.
In plain terms, cryptocurrencies are digitalized digital assets that can be exchanged between users without the need for any central authority, most of which are being created using a special counting technique called ‘mining’. ۔
Currencies such as the US Dollar, the Great British Pound and the Euro are accepted as legal tender because they are issued by the central bank. Digital currencies, such as cryptocurrencies, do not rely on public trust and confidence in the issuer. Thus, a number of factors determine its value.
Factors that determine the value of cryptocurrency
Principles of free market economy (mainly supply and demand)
Supply and demand are an important factor in the value of any value, including cryptocurrencies. This is because if more and more people buy a cryptocurrency. If ready, and others are willing to sell, the value of this particular cryptocurrency will increase, and vice versa.
Large-scale adoption of any cryptocurrency could bring its value to the moon. This is because of the many corrupt currencies that limit their supply to a certain limit and, according to economic principles, the same increase in supply without an increase in demand will increase the value of this particular value.
Numerous cryptocurrencies have invested more resources to ensure mass adoption, with some people putting pressure on personal life matters with the intention of making them indispensable in everyday life, as well as their cryptocurrency. Also focused on application.
If a fiat currency, such as the US dollar or GBP, inflates, its value increases and its purchasing power decreases. This will then lead to cryptocurrencies (let’s use the bitcoin as an example). As a result, you’ll be able to get more out of this fiat with every bitcoin. In fact, this situation has been a major reason for the rise in the price of bitcoin.
History of scams and cyber attacks
Scams and hexes are also key factors affecting the value of cryptocurrencies, as they are known for their wild fluctuations in value. In some cases, a team supporting a cryptocurrency may be scammers. They will increase the value of cryptocurrency to attract people without discrimination and when their hard earned money is invested, the value is reduced by scammers, who then disappear without a trace. ۔
Therefore, it is necessary Beware of cryptocurrency scams Before you invest your money
Some other factors to consider, which affect the value of cryptocurrencies, include:
Etiquette in which cryptocurrency is stored, as well as its usefulness, security, ease of acquisition and cross-border acceptance
The strength of the community that supports cryptocurrency (this includes funding, innovation and loyalty of its members)
Less associated risks of cryptocurrency perceived by investors and consumers
Emotions of the news
Market liquidity and cryptocurrency fluctuations
Country regulations (including banning cryptocurrencies and ICOs in China and its acceptance as a legal tender in Japan)