Factors Affecting the Value of a Cryptocurrency – Superstorer

Supply and demand

Price of any commodity is determined by its demand in the market and supply. Same goes with crypto currencies. Initially when people were not aware of any kind of digital currency the demand was low and supply was unlimited thus the price if digital currency was very low foe example bitcoin when was introduced in 2009 its price was $0. But gradually when it started gaining attention its demand increased and so the price that was $1000 in 2013 and now in 2022 it is $42900. Thus this clearly shows as the demand of crypto has increased with its limited supply its prices are gradually increasing making it suitable for investment. Utility of crypto in cross border payments and its easy to use and invest nature has also contributed in increasing its demand worldwide. Taken the example of bitcoin its limited number in the market has led to limited supply and thus with increase ij its demand the prices of bitcoin are gradually increseing. Node count is another aspect that can be used to determine the demand of any crypto. Is the number of active digital wallets of crypto. The more the node count of any particular crpto currency the more is its demand and it ultimately increases the prices of the currency in crypto market.

Cost of production

Mining of crypto requires a well equipped special server and computer technology, electricity and human resources for mining block chain. As the cost of mining goes up the price of crypto currency also increases. The miners are rewarded for the work they do and this is included in the cost of production of the crypto as well.

Availability on exchanges

The more popular is the crypto currency like today bitcoin is taken as a synonym for crypto currency, the more it is available for many exchanges thus more it is used for online transaction and investment which increases its demand in the market which ultimately increases its price.

Competition

Various crypto currencies have been introduced in the market after 2009 when bitcoin was the only major player. Thus as the number of crypto increases people have a range of options and they have multiple choice to invest in. like there are limited number of bitcoins in the circulation and thus this limited number gives other crypto currencies an advantage to come and occupy the market.

Governance

Crypto is currently out of any control authority but it may come under government taxation maybe soon or later due to increasing popularity and demand . dur to involvement of the central governing authority the middleman cost may come in play and this may increase the cost of the currency.

Regulations

Decentralized nature of crypto has eliminated it from any set of rules and regulations and with time this may change. There are the possibility that crypto comes under certain regulations with respect to trading and investment and this may include certain charges laid on its transactions which may ultimately increase its price .

Mass effect /media affect

Reach of the audience to a particular commodity helps it to gain popularity and this gives demand a boost in any market. Media today plays an important role for any entity to reach the mass audience. Thus the positive feedback of media towards any crypto helps it to gain grounds by gaining trust and popularity which helps to increase its demand.

company’s image

crypto currencies are mined by certain technological computer based companies. The image of the company is reflected in the product and thus a positive background of any crypto currency and the company mining it helps to gain trust of the people increasing its price due to rise in demand .

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