How does Cryptocurrency increase its value?
Cryptocurrencies are becoming the newest ‘big thing’ in digital technology and are now recognised as part the monetary sector. It has been called the’revolution of money’ by many enthusiasts.
Cryptocurrencies can be defined as digital assets that are distributed and exchangeable between users, without the need for central authorities. They consist mainly of special computation techniques, known as mining.
Because they are issued by a central bank, legal tender currencies such the US Dollar, Great British Pounds and Euro, can be accepted. However digital currencies such cryptocurrencies don’t rely on public trust in their issuers. As such, several factors determine its value.
Factors determining the value of cryptocurrencies
Principles of Free Market Economy
Supply and Demand are key factors that determine the value of all value items, including cryptocurrencies. This is because the cryptocurrency’s price will rise if more people buy it and others sell it.
Mass Adoption
Any cryptocurrency can go up in value if adopted mass. This is because many cryptocurrencies are limited in their supply. According to economic principles an increase to demand without an equal increase in supply will lead a price hike for that commodity.
Best cryptocurrency course have invested more resources in order to ensure their widespread adoption. Some focus on the potential application of their cryptocurrency to pressing issues in personal lives, while others consider it to be useful in everyday situations.
Fiat Inflation
Inflating fiat currencies like the USD, GBP or GBP causes their prices to rise and their purchasing power to fall. This will make cryptocurrencies (let’s use Bitcoin as an instance) more valuable relative to the fiat. With each bitcoin, you can acquire more of this fiat. This has been the primary reason why Bitcoin prices rose.
Scams and Cyber Attack History
Hacks and frauds are core factors in determining the value cryptocurrency. Sometimes the team backing a crypto currency may be the fraudsters. They’ll raise the price of cryptocurrency to attract unsuspecting users, and when that money is invested, they will reduce it by the scammers, before disappearing without trace.