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In this article we will deliver an insightful explanation for you to have a better understanding about crypto value and how it makes gains or losses. There are a number of different reasons why this might happen, it most often comes down to, simply, how practically useful a cryptocurrency is and the number of people that therefore purchase and use it. Just like anything else, value is decided by the amount of people that agree it is valuable.
*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.
It’s important to note here Metcalfe’s law, that essentially theorises the value of a network is decided by the amount of people - or nodes - that actively use it. It’s a theory that dates back to 1980, originally being used to determine the value of a computer or telecommunications network. Contrary to some people outside the crypto world’s belief, a crypto’s value is decided much the same as any other commodity: supply & demand. There is no magic reason Bitcoin is now so valuable - simply because of its low fixed supply, and that it’s becoming more widely adopted as institutions and investors are realising its usefulness and potential in P2P transactions and storing value.
The demand for a cryptocurrency is influenced by a variety of variables. The demand for the coins will rise in proportion to their use. This means that if the crypto monetary system functions effectively (i.e., quick transactions and cheap costs), smart contracts become more widely used, and more businesses begin to embrace crypto, demand for crypto will eventually rise and therefore its value will rise also.
Also, cryptocurrencies are becoming more popular as a store of value investment. Bitcoin, for example, is sometimes referred to as ‘digital gold’ or ‘gold 2.0’ because some see Bitcoin as the new alternative to holding stores of gold as a wealth reserve not in fiat currency. Due to this, many investors are holding large stores of Bitcoin as long-term investments which helps it to maintain its value. Comparatively, when these investors decide to sell the value will reduce.
Again, there is no magic reason a crypto gains value. Its value is decided by supply & demand, which is affected by the usefulness and quality the crypto may provide. We may see huge surges in a crypto’s value, but this can all be attributed to the same causes we have seen for any commodity.
*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.
In this article we will deliver an insightful explanation for you to have a better understanding about crypto value and how it makes gains or losses. There are a number of different reasons why this might happen, it most often comes down to, simply, how practically useful a cryptocurrency is and the number of people that therefore purchase and use it. Just like anything else, value is decided by the amount of people that agree it is valuable.
It’s important to note here Metcalfe’s law, that essentially theorises the value of a network is decided by the amount of people - or nodes - that actively use it. It’s a theory that dates back to 1980, originally being used to determine the value of a computer or telecommunications network. Contrary to some people outside the crypto world’s belief, a crypto’s value is decided much the same as any other commodity: supply & demand. There is no magic reason Bitcoin is now so valuable - simply because of its low fixed supply, and that it’s becoming more widely adopted as institutions and investors are realising its usefulness and potential in P2P transactions and storing value.
The demand for a cryptocurrency is influenced by a variety of variables. The demand for the coins will rise in proportion to their use. This means that if the crypto monetary system functions effectively (i.e., quick transactions and cheap costs), smart contracts become more widely used, and more businesses begin to embrace crypto, demand for crypto will eventually rise and therefore its value will rise also.
Also, cryptocurrencies are becoming more popular as a store of value investment. Bitcoin, for example, is sometimes referred to as ‘digital gold’ or ‘gold 2.0’ because some see Bitcoin as the new alternative to holding stores of gold as a wealth reserve not in fiat currency. Due to this, many investors are holding large stores of Bitcoin as long-term investments which helps it to maintain its value. Comparatively, when these investors decide to sell the value will reduce.
Again, there is no magic reason a crypto gains value. Its value is decided by supply & demand, which is affected by the usefulness and quality the crypto may provide. We may see huge surges in a crypto’s value, but this can all be attributed to the same causes we have seen for any commodity.
*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.
