The fundamental difference between the cryptocurrency and the usual type of money is that government agencies do not support electronic forms of payment. Money of its origin has no physical value. They can be provided with goods and gold and supported by government obligations. But in fact, the price of money is more regulated by the government, which gives out the currency than the real value.
When we use cryptotherms, it is important to understand that owning non-physical assets is unreliable and unsafe. All the capital that belongs to the user is protected only by the private key and its ciphers. Only this guarantees the safety of any operations, the protection of property.
The network that supplies the cryptocurrency determines its value. There are other factors that influence:
- Supply and demand. If the demand is constant, this condition will help to save the cost of electronic funds. Bitcoins should be released at a certain speed, their total number should not exceed 21 million. The inflation will not be able to change their quotation at constant demand. However, not all crypto converters use this approach.
- The cost of bitcoins. The cost of all other crypto conversions is tied to it. Therefore, at the moment when the bitcoin price changes, other currencies will also change their value.
- Energy costs for verifying transactions. Indeed, the protocols used by bitcoins consume a lot of electricity. For comparison, the delegated-share rate of Lisk, consumes significantly less, which affects prices.
- Degree of complexity. This indicator also affects the provision of crypto currency, like energy. And it affects the price of each token.
- Public attitude. Much depends on investors and on how they perceive the space of the blockbuster. It also forms a pricing policy. When media are positive about the block, prices are rising. In the event of any scandal, the prices of tokens immediately fall on the stock market.
- The key investors. Leading players in the market that have a significant amount of cryptocurrency on their accounts can all quickly sell it. This will lead to a sharp decline in the price of the currency. Big investors are called whales, because their property affects the entire market.
- Usefulness of currency. Much depends on the capabilities of the cryptocurrency. Where can it be spent? What on lets you do? All these factors affect the price of the currency, as well as the company that issued it.
Due to the impact of all these factors, the price of the crypto currency may be unstable. For this reason, some investors find it possible to earn money on fluctuations in rates. While the value of the dollar or the euro is relatively stable, this does not apply to the position of the cryptocurrency.
The cost of the Lisk token increased from $2 in August 2017 to almost $8 in just one month. Then the rate returned to $4 in November 2017, and in January 2018 the price of the currency was above $20. Such fluctuations are normal in the world of cryptotrade. Some analysts argue that the currency is not suitable for regular transactions. However, with a wider implementation, cryptotherms will find its stability. Now the market is in a hurry. Everyone wants to identify tokens that grow rapidly. This factor led to a huge increase in the crypto-active market.
Regardless of whether crypto conversions are a good indicator of value, this is an idea that everyone today never tires of discussing. Many doubt the value of the block without the provision of goods. But most of the world's currencies are also not provided with goods and precious metals.
In many ways, operations with crypto-currency are like buying a company's shares. It is important to acquire such detachments, which in the future can get real value. If the project is very popular, it will increase its value on the market more than any other factor. For any investment, a good analyst is needed, observing the exchange rate and serious deep research.
Cryptocurrencies receive their value from the network on which they are based. As a result, people are willing to pay for them. Cryptocurrency is still a relatively young concept of money, therefore such a status inevitably causes some volatility of the object in the market.
We can say that the idea that all cryptocurrencies are not a safe investment object is false and, perhaps, even outdated. As long as the cryptocurrency will consist of a solid, respectable project and be safely stored, it will be a good repository of value, like any other investment.