The value of cryptocurrencies are dependent on the market, where the prices of various cryptocurrencies vary a lot and is one of the most fluctuating and volatile markets to date.
The price of cryptocurrencies like any other products is dependent on demand and supply. If more people demands a particular currency and it is short in supply, then the value increases. More units are mined by miners to balance the flow. However, most currencies limit the supply of their tokens.
For instance the total amount of Bitcoin issued is only 21 million. Therefore Bitcoin’s supply will decrease in time and will reach its final number by 2140. It also explains why Bitcoin’s value is higher as compared to other cryptocurrencies.
Now you must be wondering, what is cryptocurrency used for?
Cryptocurrencies can be spent for different purposes and the best part is, all transactions are completed online! There are 3 different transactions that can be performed when using cryptocurrency:
1. Bitcoin Trading
2. Personal Spending
3. Crowd Funding
Firstly is Bitcoin trading.
Bitcoin trading can be very profitable for both professionals and beginners. The market is new, where arbitrage and margin trading is widely available.The currency’s high volatility has also played a major role in bringing new investors to the trading market.
Compared to other financial currencies, Bitcoin has very little barrier to entry. If you already own Bitcoin, no verification is required and you can start trading almost instantly. Moreover, Bitcoin is not fiat currency. This simply means the price is not related to the economy or policies of any single country.
And unlike stock markets, there are no official Bitcoin exchanges. Instead, hundreds of Bitcoin exchanges operate 24/7 around the world. Because of no official exchanges, this results in no official Bitcoin price where the currency is known for its rapid and frequent price movements.
Secondly is personal spending. You can use Bitcoin to purchase almost anything!
From buying cars to travelling the world.
In December 2013, a Tesla model S was purchased for a reported 91.4bitcoins. The dealer, located in California continues to accept Bitcoin as a means of payment. They have since managed to sell a Lamborghini Gallardo for 216.8 Bitcoin.
You can also travel the world using Bitcoins! Just head to www.cheapair.com. On 22nd November 2013, they announced that they would be the first onlinetravelling agency accepting Bitcoin. You are able to purchase flights, hotels, car rentals and cruises. You can even book the whole package.
Cryptocurrency also provides the chance for you to give back to society.
How? By crowd funding. You are able to be part of someone’s success story by donating to a crypto crowd funding project. Companies such as Lighthouse have built their crowd funding platform using Bitcoin.
The perks of donating through this system are you will not be charged for your donation and funds will not be released unless the project meets its criteria. You are also able to withdraw from the campaign before its completion. You have complete control over the donation! Examples of successful funding campaigns are from Dogecoin, which includes campaigns run for Nascar driverJosh Wise.