July 22nd, 2018
Cryptocurrency is a revolutionary currency that is grabbing the attention of millions around the world. It is similar to any other currency, as it can be used to buy any products or services. Some currencies are backed by precious metals like gold, whereas others are backed by “nothing”. Cryptocurrencies were designed as a unit of exchange and place to store assets without bringing into play any type of financial institute or central bank. There are many factors that can affect the price of Cryptocurrencies. This also affects the current price of bitcoin. Here are the main features driving the price of cryptocurrency:
All precious metals gain their value because of their limited supply and utility, its price is often tied to supply and demand. This simple economic factor affects the price of almost everything. In many places, cryptocurrencies are classified as an asset and in some places as a currency. The maximum unit of Bitcoin is capped at 21 million units and even now, mining is becoming tougher and more time-consuming. This will also have an effect on the price of cryptocurrencies as well as the current price of bitcoin.
The energy put into securing the blockchain is intensive. In the case of POW (Proof Of Work),blockchain which is the most popular platform, can use a massive amount of energy. Energy usage can be a factor in the price of cryptocurrencies.
The more mining that needs to be done, the more secure the blockchain will be. This can have an impact on the current price of bitcoin, as well as, to the ties of cryptocurrencies.
The utility is a key factor in the price of any cryptocurrency. If digital currency can’t be used as a mode of payment or an investment, then its value will be less. Bitcoin’s value is increasing over time because of its acceptance globally as a mode of payment. Its high energy usage and difficulty gives it a reasonable price and it can also be used as an investment. Changes in utility can lead to price volatility.
The public’s perception of cryptocurrency has a huge impact on the value of the currency. As for Bitcoin, one price driving factor can be the response of users to this innovation. This digital currency can’t be tampered with in the traditional manner, but it is getting some negative reactions because of its criminality. Cases of fraud can also have an impact on the digital currency, but positive impacts can increase its price on the global market.
Bitcoin is often considered as the most popular currency of the cryptocurrency world. The rise and fall of the price of Bitcoin has had its effect on other digital currencies. Litecoin, which is a popular digital currency has its own price reactions proportional to the rise and fall of Bitcoin value. Bitcoin is the first mainstream cryptocurrency market and is mostly supported around the world, its price can influence other digital currencies greatly.
Media reporting and its perception, play an important role in its price increase and fall. This may sound surprising to many, but media has the power to manipulate the price of digital currencies. Reporting positive and negative stories about the digital currency can cause the price to fluctuate.
The role of investors in the price of digital currency is huge. With many cryptocurrencies, especially the smaller ones, investors get the chance to manipulate the price. With a huge amount of capital at their disposal, one can buy a good share of the coin supply and raise the price. Many people see these reputed investors putting money towards digital currency and are encouraged to invest.