How does Cryptocurrency have Value?

Analysts and experts disagree over what gives all cryptocurrencies value. It is a complex topic but it is an important one. Let’s take a quick look at how cryptos have gained value.

Supply and Demand

Gold, oil, and diamonds are finite resources. They are similar in this way to cryptos. Most cryptos have a finite amount of coins available to mine.

Gold and oil are similar to cryptocurrency

A critical aspect of a cryptocurrency is balancing the supply of coins in order to maintain value. The difficulty of mining coins is changed depending on the amount of miners.

The more miners, the harder it is to ‘crack the code’. It is this check that maintains the balance of supply and demand.

Supplying this demand requires time, money, and energy.

Cryptos are created through a process known as ‘Mining’. This process is intensive which results in cryptocurrencies gaining value.

Speed and Reliability

The ease-of-use of a crypto is a focus for many new coins today. High fees and long transaction times aren’t wanted in the crypto world.

Take Bitcoin as an example. It has high transaction fees and long transaction times. Improvements on Bitcoin form a large share of cryptos in existence today.

Bitcoin continues to be a success because it was adopted by users. Today, the quality of your average crypto is higher. If Bitcoin were created now, it would not have the same success!

Developing various technologies, such as blockchain and hashing, is the focus. Many up-and-coming cryptos aim to improve upon what already works.

Take a look at some new cryptos coming out. You will find buzz words like “transaction speed” and “reliability”. These words aren’t used sparingly – research on new cryptos is crucial!

News

Perhaps the most volatile impact on value is News.

Cryptocurrency is in its infancy (9 years old). Law, businesses, financial institutions, and regulations need time to catch up.

Decisions made by these established powers highly impact the value of cryptos. The old system of rules are not yet applicable to this new technology.

The balance between old law and new technology

Digital law and protection is a segment of the economy that needs improvement. It is not developed enough for the present day internet. How to create laws surrounding cryptos is still largely unknown. This has the potential to create a complex environment for cryptos.

The continued growth of digital law will have a huge impact on the world. It will prove to be pivotal to the future of cryptos.

Governments are noticing and reacting to cryptos now. This leaves us with an unpredictable future for crypto laws.

Power to the People

Cryptos enable the everyday person to have control over their money.

Cryptocurrency can provide a safer platform for us to manage our wealth.

Better control over your money

These are arguably the most valuable characteristic of cryptos.

Some governments are unable to control and monitor their currency’s health. What options are available to people who experience this?

How can parents provide for their family if this is a reality?

Cryptocurrency stands as an alternative choice for many people in developing countries, including Zimbabwe, South Africa, and Nigeria.

People all over the world suffer from unstable financial systems. Cryptos provide an option for people who have no alternatives.

Future Value of Cryptos

Ultimately, the debate continues over the value of cryptos. This brings a far-ranging set of questions to the table that we have only begun to touch upon.

We will see a progression in how societies value cryptos over the coming years. The technology will develop, as will the law. The future of cryptos is unknown, but it is exciting!

We could see cryptos replace our currency and move further into a digital world.

So, we now have an idea of what cryptos are.

Let’s have a look at the structure that makes it all possible – blockchain.

Head on over to the next article where we break blockchain down piece-by-piece!