What factors play into the value of cryptocurrency? With so many cryptocurrencies in existence, it can be hard to tell which ones are worthwhile investments and which ones you should avoid like the plague.
If you’re interested in investing in cryptocurrency, here are five ways to increase the value of your cryptocurrency holdings.
1) Currency Increases Through Scarcity
To increase in value, currencies need to be scarce. Currencies that are freely available are worth less because they’re overabundant. Imagine if every American had a bank account with $100,000 in it. That account would be meaningless—it wouldn’t have any more value than $1 does today because there’s no scarcity.
Scarcity is also why collectibles like paintings and sports cars increase in value over time; there simply aren’t enough of them on earth for everyone to own. The same holds true for cryptocurrency: Being overabundant doesn’t mean it will cease to exist but, likewise, not having any inherent scarcity means its value won’t go up—unless things change dramatically (like switching from Bitcoin to Bitcoin Cash or Ethereum).
2) Cryptocurrencies are Becoming Accepted by Businesses
As new technology becomes more widespread, there is always a certain amount of skepticism from those who are unfamiliar with it. For example, after the email was first introduced, businesses weren’t sure what to make of it and were slow to adopt it as a means of communication.
As time went on and more people realized that electronic mail had its benefits over conventional mail, businesses began to slowly come around and started using email as an effective way to communicate with customers and clients.
Today most companies have email addresses so they can stay in touch with their customers and potential clients online. As cryptocurrency adoption increases and people become more familiar with how they work, we will see an increase in how businesses accept cryptocurrencies as a form of payment for goods or services just like they accept PayPal or credit cards now.
3) Cryptocurrencies are Being Used by Businesses
Businesses around the world are starting to accept cryptocurrencies as a viable method of payment. Just last year, Subway and Microsoft both started accepting bitcoin as a form of payment on their websites.
And we’re not even talking about major corporations — there are over 100,000 businesses around the world who accept cryptocurrencies as a form of payment. These businesses understand that if people can pay with cryptocurrency online, they may be more likely to shop with them in person.
4) Capital Flows into Cryptocurrencies Value
A number of factors other than popularity can impact cryptocurrency values. This means that any cryptocurrency still in its infancy may experience drastic value changes, even if it hasn’t been released to a wide audience.
Over time, as these cryptocurrencies become more widely used, their values will likely increase because of one or more factors. Some of these include: Anonymity – A lot of people prefer using cryptocurrencies because they can keep their transactions and holdings private and secure.
5) Other Factors Which Increase the Value of Cryptocurrencies
There are many factors that determine if a cryptocurrency increases in value. More demand and less supply are always one of them. However, there are some other factors of cryptocurrency values that come into play: more adoption (more people buying and using it) can also affect its price; more services built on top of it; more use cases; and even if governments decide to adopt it as an official currency (or not). When Bitcoin was created by Satoshi Nakamoto, his original intention was to have Bitcoin become a widely adopted digital currency for everyday transactions. These days Bitcoin has become far too expensive to be used for micro-transactions or day-to-day transactions because of how much money miners spend on hardware equipment that keeps Bitcoin running smoothly.
