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What Determines the Value of a Cryptocurrency in 2020

Back in 2009, when Bitcoin was introduced, it can be said that the majority of the public wasn’t so excited about the whole concept and many of them didn’t expect much from it. Over time, Bitcoin managed to add a significant sum to its worth. However, we witnessed that its worth exploded back in 2017. Since then, it can be said that now the public doesn’t have any kind of suspicions regarding the future of cryptocurrencies. But it should be said that there are still some uncertainties among those who don’t have a lot of knowledge related to the basic concept of cryptos. Therefore, we witnessed the birth of some theories that don’t really resemble anything near the truth.

One of the main questions is, how is the value of particular crypto determined. Since digital currencies were introduced to the public as totally independent from any banking system, people were skeptical about them. So, the source of its value is not gold or anything that’s the base for fiat currencies. If you would like to learn about relations between gold and Bitcoin, you check codecondo.com. Anyway, this is the question that still isn’t properly understood by a high percentage of the public. Therefore, we’ve decided to provide some answers in order to clarify the whole situation. So, we are going to provide some facts that are going to provide some crucial knowledge to the people. Without further ado, let us begin.

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Demand

The first and most obvious way to see if some crypto has justified its value is to check the demand. Thankfully, this is not a hard thing to do. We are able to check the demand on various crypto exchange websites, where we can see the exact demand for every digital currency available. Even though in the beginning official systems like banks and governments didn’t recognize them at all, now we can see that countries implement some of these concepts. For example, Belarus is the first country in the world that completely legalized all of the cryptocurrencies and made them tax-free until 2023. At the same time, we can say that some countries started to think about developing digital currencies of their own. For example, there is some information that Russia, South Korea, and China are doing exactly that. So, we can see that, because of the demand, they are going to reach a significant value, that is without a doubt.

Node Count

One of the most important elements that determine the value of all cryptos is node count. This is a measurement that provides the information of how many e-wallets out there are active. They are calculated by how many of them can be found online through searching through the sites of a particular digital currency. In order to see if the price of some crypto is justified, you can just search for active wallets, or as we said, node count. This is probably the fastest way you can determine if investing in that particular crypto is a good move.

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The Competition

As you can presume, the competition in the world of digital currencies is pretty high. There are so many of them that 99.9% of people in the world can’t name all of them. Even though Bitcoin is the best known of all of them and has the biggest worth, that doesn’t mean that other ones are not a good option. For example, Ethereum is ranked in the second place of the market capitalization. It became so popular that many of the online casinos use it as a legit method of payment. Furthermore, we can see many others like Litecoin, Monero, and EOS are picking up pretty quickly. However, we can say that Bitcoin is going to be number one for a foreseeable future and that the chances of that changing are pretty slim.

Fiat Currencies Inflation

We can see that the inflation that leads some of the fiat currencies’ value to decline. At the same time, the value of cryptos starts to increase. This is a trend that we have been able to see from our experience. This is not officially confirmed by some experts. In fact, some unofficial channels talked about it, but there is no official statement. The reason for this happening is that you are able to get more of that currency by buying it with your cryptocurrencies. The best example is the US dollar. This is something that can be said in this day and age since ECB and FED are printing a significant amount of dollars for a couple of years now and the interest rates are at an all-time low at the moment. 

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Adoption

The adoption of a certain cryptocurrency adds a significant sum to its value. The best example of this is the Bitcoin. Back in 2017, the Bitcoin adoption was at its peak. At the same time, we witnessed an increase in its value that shocked all of the worlds. It was so unexpected that it shocked some of the people who were familiar with the functionality of digital currencies. The main reason for this increase is that the total number of a particular digital currency is limited to a certain sum. So, instead of producing more coins, their worth is growing. A high mass adoption was introduced by numerous companies that agreed with having, for example, Bitcoin as a method of payment for their services or products. By the current trends, we can see that all the ways are leading to mass adoption. So, their value is bound to increase in the future.

The Takeaway

As we said, there are a lot of uncertainties regarding the world of cryptocurrencies, even though they became widely popular in the last decade. We said that the most important question is its value. Here, we’ve presented you with several elements that have a massive influence on the worth of every cryptocurrency out there. We’ve made an attempt to provide several answers to this question. We hope that you will find our article useful and that it will have an influence on your future decisions about investing in one of these.

About Ronald Ford

Ronald Ford

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