Use of Cryptocurrency was adopted at least a decade ago thanks to a computer programmer common as Satoshi Nakamoto, there are claims that this persona is unknown still now. Well, at that time, few people believed in the power of Cryptocurrency in the money market future. Ten years down the line, some digital assets can't even be afforded by most individuals. Similarly, those who took the new world order seriously are reaping their fruits now. Take for instance Bitcoin, it traded against the US dollar at less than $10 in the beginning, as of now its ranging at more than $10,000.
This then begs the question, how does cryptocurrency gain and maintain its value in the space it's operating in? You need to remember some facts clearly if you are going to approach this issue conclusively. Foremost, take gold as the reference, it was used for millennia as a store of value. Until now, it still remains competitive and even reserve banks have backed up their fiat currencies using this precious mineral. For it to start functioning, people had to believe that it has some value and can be used for exchange of products. Modern day cryptocurrencies are no different, the first users began by adopting it as a means of payment.
Cryptocurrency gains its value just like fiat cash through several factors, some of these include the following. Foremost, most importantly is through scarcity and limited supply in the market. Bitcoin for instance was developed at a limited amount of approximately 21 million coins in its entire period. 10 years later, the supply of Bitcoins in the world is estimated at around 18 million coins. The supply is normally strictly controlled and only a few coins can be mined every new year. This means that as the supply gets scarce, its price will rocket for a person to acquire it.
Something else that maintains the worth of Cryptocurrency is the utility. When Bitcoin started, it was used as a means of payment for people engaging in illegal activities in the silk valley because their transactions were not traced. As time went by, it was perceived as a good place to keep investment due to the increasing value. These determined uses made its worth increase. It's quite a simple way of understanding, if something seems beneficial to you, you'll want to continue using it. This is what keeps cryptocurrency alive for now and even the coming years.
Durability of the electronic currency is another issue that has kept the worth of Cryptocurrency improving. Fiat cash is made of paper which can easily get damaged or deteriorate in quality. The new currencies exist in electronic form in powerful secured networks called blockchains. They can therefore never be destroyed by anyone, and they'll always remain in supply. Even when a person loses their assets, they don't get off the network and their record is still available somewhere. The effect of this is that people develop trust and are willing to put their money in cryptocurrency.
Additionally, capacity to be divided into smaller units has contributed to digital assets maintaining their worth. Bitcoin for instance, it has capacity to be broken down into smaller units called Satoshi with the smallest one ranging up to 8 decimal point value. This is unlike fiat cash whose divisibility is limited to several denominations set by financial institutions. The capacity allows millions of transactions to be carried out globally and this raises the trade volume. Increased volume of trade raises the liquidity of Cryptocurrency and this attracts users, in turn taking the value higher.
Diversification of use category has been crucial in raising the stakes for cryptocurrency. What this means is that there are now many different categories of purposes that you can use with cryptocurrency. Bitcoin is currently known for storage of wealth for most individuals. Ethereum on the other hand, has changed the aspect of making different payments like purchase of real estate. This achievement was through use of smart contracts and allowance to transfer tokens as valuable assets.
To sum it up, the above are some issues that continue to be instrumental in ensuring that cryptocurrency remains valuable. Its presence can only be compared to that of gold and is truly going to be a significant shaker in the money market.