The Value Of Cryptocurrency and Its Commercial Uses
Cryptocurrencies continue to increase in value and popularity today due to a variety of reasons. These factors drive the prices of these digital assets, creating volatility and opportunity for everyone to take advantage of.
But what specifically are these factors that make cryptocurrencies valuable? How are digital currencies used commercially in today’s market? These are the things you will learn in this article.
What Determines The Value of a Cryptocurrency?
Here are the factors that give cryptocurrencies value today:
- The blockchain technology
Many people believe that the technology behind most cryptocurrencies can introduce more applications that can streamline existing processes for the better. Similar to what happened to the introduction of the internet decades ago, people are banking on the belief that blockchain technology can present another revolution that can change the way things are done today.
- Rising demand
The increasing demand from everyone who wants to own or trade cryptocurrencies gave birth to new exchange platforms. This, in turn, invited more people to put money in cryptocurrencies because the platforms made these alternative assets more accessible. This cycle is one of the fundamental drivers of value for digital currencies.
- Fiat inflation
When fiats fall in value, cryptocurrencies tend to go up because more people are using them as a hedge for their assets.
- Supply and demand
Supply and demand are two of the biggest factors in determining the value of almost anything available in the market, and this includes all digital currencies in existence. Since the supply of cryptocurrencies is also limited, it is only natural for prices to be driven to new heights, especially now that digital currencies are very popular worldwide.
- Production cost
The mining process for cryptocurrencies comes at a high cost because of the need for specialized hardware to complete the task. Investing in such hardware costs capital that can be recovered only by pricing the mined digital coins at a higher value that will result in a profit for miners.
- Mass adoption
More businesses are accepting cryptocurrencies as payment for purchasing goods and services. Tesla, for example, announced that it will be accepting Bitcoin payments in purchasing its vehicles. This announcement created a massive surge in the value of Bitcoin and other cryptocurrencies. Having more established businesses accept the value of digital currencies can continuously boost the value of the said tokens because it increases investor confidence in the alternative asset.
Commercial Uses of Crypto Today
Mass adoption of cryptocurrencies exist, and here are proofs of their commercial usage:
- Digital advertising
This entices audiences of ads to earn tokens by driving engagement on the advertisement through commenting and sharing of the posts. Advertisers, on the other hand, can place their ads on more relevant and higher traffic locations by buying tokens.
- Travel tickets
More service providers enable cryptocurrency payments in exchange for flight tickets, car rentals, cruises, and hotel rentals.
- Retail products
Both SMEs and more established businesses are accepting cryptocurrency payments for buying fries, drinks, pizzas, and other consumable goods.
The value of cryptocurrencies is based on several, intertwined factors that continue to keep the market interested in them. Whether you believe in any of the factors listed here and make them your reason to put money in cryptocurrencies, you must be responsible for your investment. The cryptocurrency market is very volatile, and it can be your way to financial freedom if you understand what you are doing.