What Affects the price of a CryptoCurrency
Cryptocurrency is a new trending currency in the world. It works on the same principle where a currency or an account gets value if people thinks it has value. Many cryptocurrencies are made on the roots of Gold & other precious metal while others are on nothing. But if a cyrptocurrency is valued by people & used as trade then it rises.
The basic aim of any crypto-currency was to place your assets safely without relying on any central banking services. Today I am going to tell you some aspects which affects the price of a crypto-currency (All of them). After reading this article , you will be able to know about the working & rising factors of crypto-currency.
How the Price of a cryptocurrency Raises & Falls Down ?
There are so many factors which affect the price of a crypto-currency , we are going to know some of them today.
Demand & Supply
The price of precious metals are affected by the demand & supply. Supply/Demand is a simple economic factor that affects any cryptocurrency. For Ex- Bitcoin is considered as an asset in some countries while currency in other countries.
If the supply of a crypto-currency is controlled or limited & people think it has value more than they are paying, then soon the crypto-currency will rise over the price.
Now if a crypto-currency has reduced supply & people don’t even bother to buy it, then the cypto-currency will soon fall down.
The energy consumption of the security block chain is quite high. The most popular block chains i.e proof of work (POW) consumes very high amount of electricity. If we want an estimate, then a block chain consumes so much electricity which is equal to the consumption of a small country.
This consumption affects the price of a crypto. The price will be added on a single unit of crypto-currency which determines the minimum price of a currency.
Level of Difficulty in Mining
The security of block chains defines the level of difficulty for mining a crypto-currency. How difficult the mining is on the platform ( the resources & labor spend on it). This directly impact the price which can be seen on the blockchains such as Bitcoin and Litecoin.
Utility of a CryptoCurrency
The main impact of the price of a crypto is based of its utility or usage. If you can’t use a crypto as investment or payment use , then that crypto will not not be able to rise as Bitcoin. In case of Bitcoin, it is used for payments & investment both. This gave Bitcoin a very high price & utility. As Ether was designed for smart contract platform which increases the price over other alt coins. The change in utility causes price volatility.
What people perceive on a crypto is a very fastest factor which effect the price of a crypto-currency. If people think the currency as a trust factor & buy them more & more , then the value will increase. For example IN Bitcoin people has bring trust on it & start buying more & more to invest in it. Now presently everyone knows the level that it has touched.
The trust value is made by many factors like
- Security in the Blockchain.
- People’s reviews after their investment.
There are so many cryptos which are not known to people & are smaller than any popular ones.
Price of Bitcoin
The price of Bitcoin has effected the mind of many people who think cryptos are not as secure investment. But after people getting high investment returns on Bitcoin. People start checking other alternatives of bitcoin who can’t afford a bitcoin. This influence the circulation of other alternatives of cryptos.
Bitcoin has become a standard in other cryptos. Many cryptos are based on the secure blockchains of Bitcoin.
Bitcoin is first mainstream crypto & most supported, trusted cryptocurrency which created trusts on other cryptos.
The reports of Media can fame or defame anything which applies on cryptos too. The Newspapers & News channel creates a perception of a crypto in the people minds who reads or watches them. The positive or negative reviews of any crypto will effect the circulation of Bitcoin & causes the price to fluctuate.
If a cryptocurrency is not much popular, then the prices of such crypto can be affected in the multiple ways
- Crypto with less price can be stocked by investors & then try to promote them to increase the price.
- If investors spend too much on a crypto , then the price of that can be increased or decreased faster.
- If Investors shows their interest in a currency, then common people will be influenced and investment of the currency increase which results in higher price.
Every Crypto-currency has been made with some purpose. The first cryptos were made for some purposes. For example Bitcoin was the first crypto , Litecoin was silver to Bitcoin Gold. Peercoin used an innovative POW and POS (proof of stake) combination. Ether had a practical utility for being a smart contract token to allow distributed, secure execution of smart contracts, for the price of what the ether token is, which very few cryptocurrencies can do.
These are some of the know reasons by which a cryptocurrency can be a successful or unsuccessful. If you find this article useful, then please comment to let us know , Share with your friends & Family to get some useful information about the same. Thank You.