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How Cryptocurrency Gets Its Value?

How Cryptocurrency Gets Its Value?

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Considering the gold standard, it is meant that any form of cryptocurrency is considered to be one of the best things that happened to the money. Some individuals who don’t know and understand the real definition of cryptocurrency are still wary.

But those who have known the progress of cryptocurrencies after the initial mining of Bitcoin back in 2009 know its benefits and relevance.

With that in mind, they also give more value to crypto than the traditional fiat currency. For more information, you can visit here bitcoin-prime.app.

Different types of cryptocurrencies pose significant changes to the global financial services space.

This is mainly because of the financial freedom it offers to the users through the use of decentralization.

How Cryptocurrency Gets Its Value

Cryptocurrencies are Meant to Bring More Efficiency to Money

For those who don’t know, cryptocurrencies are defined as a digital asset. It is backed by the science of cryptography.

The cryptography runs blockchain technology, enabling its users to perform financial transactions more securely, inexpensively, and quickly.

One of the good things about cryptocurrencies is that it acts way better than fiat currencies. This is because it is global, and it is not being controlled by any third-party interference or under government controls.

Let’s say that Dai, a decentralized stable coin is limitless. This means that a single token of Dai has the same value in Europe, South America, United States, and other countries in the world.

Cryptocurrencies allow their followers to perform peer-to-peer transactions without being controlled by external groups or entities.

Apart from allowing its users to transact anytime and anywhere, cryptocurrencies also enable them to do so privately and autonomously.

You can do money transactions without any counterparty or central bank, which controls all the fiat currencies you are using today.

Also Read: What is the Future of Bitcoin?

How Cryptocurrency Stores Value

Just like the other fiat currencies, such as US Dollars, cryptos need to have effective value before it can be used for any financial transaction. In connection to that, you might be asking yourself how cryptocurrency stores value.

There are two types of cryptocurrencies that work similarly, namely Ether and Bitcoin. Ethereum is one of the popular blockchains that create a digital token, which is called ETH.

Both the said forms of cryptocurrencies get their value from the outcomes of demand and supply in the market. That’s why they are known to be a volatile form of the digital asset.

Bitcoin’s volatility is known as legendary. Through ETH has a volatile price as well, its value depends on the market as well as its usefulness to CeFi (Centralized Finance) and Defi (Decentralized Finance) movements.

ETH token supports different platforms that are made in the Ethereum blockchain. These include the dapps and the Maker protocol that are all built to work with the Protocol and Dai at the same time.

On the other hand, Dai, which is a form of stablecoin, has maintained its true value. This is because it is backed by collateral assets.

Aside from that, it is also under the control of the maker Governance, which maintains the soft peg of cryptocurrencies to the US Dollars.

Also Read: How is Bitcoin Payment Beneficial for the People?

Conclusion

The value of a cryptocurrency depends on different factors, such as its demand and supply in the market.

That’s why the well-known form of crypto, Bitcoin, has a very volatile value, which can increase and decrease any time of the day.

But despite its volatility, a lot of crypto followers are still interested in investing their money in Bitcoin.

This is because they are hoping that there will be an increase in its value in the future, just like what happened in 2011, when a single bitcoin is equivalent to about 20,000 US Dollars.

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