Crypto currencies are the latest ‘big thing’ in the digital world and are now recognized as part of the financial system. In fact, supporters branded it the ‘money revolution’.
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Simply put, crypto currencies are decentralized digital assets that are exchanged between users without the need for a central authority, and most of them are created by special computing techniques called ‘mining’.
Currencies such as the US dollar, the British pound and the euro are accepted as legal tender by the Central Bank. Digital currencies, such as cryptocurrencies, are not based on public confidence in the issuer. Similarly, several factors determine its value.
Factors that determine the value of cryptocurrencies
Principles of Free Market Economy (mainly supply and demand)
Supply and demand determine the value of anything worthwhile, including the secret currency. Because if many people are willing to buy a cryptocurrency and others are willing to sell it, the price of that particular cryptocurrency will increase and vice versa.
The wholesale acceptance of any crypt can cost up to the moon. This is due to the fact that the supply of many cryptocurrencies is limited and an unreasonable increase in supply according to economic principles will result in an increase in demand.
Many cryptocurrencies have invested additional resources to ensure their mass adoption, with some focusing on the practical impact of their cryptocurrency’s personal life issues, as well as critical day-to-day issues, with a view to making it more important in everyday life.
If the exchange rate fluctuates like USD or GBP, the price will increase and the purchasing power will decrease. This, in turn, will increase the value of cryptocurrencies (let’s use Bitcoin as an example) in terms of transactions. The result is that you can get a lot of value with each bitcoin. In fact, this is one of the main reasons for the rise in Bitcoin prices.
History of fraud and cyberbullying
Fraud and hacking are also major factors influencing the value of cryptocurrencies, as they lead to wild fluctuations in evaluation. In some cases, a group that supports a cryptocurrency may be scammers; When they attract unsuspecting individuals and invest their money in scams, they reduce their value by scams, and then they disappear without a trace.
Therefore, it is very important to beware of cryptocurrency scams before investing.
Other factors that may affect the value of cryptocurrencies include:
- The way cryptocurrency is stored, as well as utility, security, ease of access and cross-border acceptance
- Strength that supports the Crypto community (this includes financial support, creativity and loyalty of its members)
- Low-risk risks of cryptocurrency, as realized by investors and consumers
- Sense of news
- Currency size and volatility
- Country Rules (this includes cryptocurrency and ICO bans in China and acceptance as a legal tender in Japan)