What Makes Your Cryptocurrencies Valuable?
In a world where value is determined by supply and demand, cryptocurrencies are no exception. Many of us wished that we bought BTC 5 years ago but do we actually understand what caused its value of it to climb to this height today? And what would happen to the value of cryptocurrencies if there is a global power outage? It is interesting to understand what powers the value of such a new asset class, where, in simple words, we can very much attribute its value to the people behind this industry.
The history of money
Currencies are a form of money that has been existing for thousands of years ago. It is a form of exchange vital to any economy where money acts as an instrument that acts as a common unit for us to perform such transactions. Imagine a world where you would need to find an object of a similar value to exchange for some apples. It is simply inefficient.
We’ve come a long way from using shells and precious metals, to coins and paper money today. However, what we have in common is the fact that people are the reason why these currencies have value. A shell or a paper dollar bill has no underlying value if there is no shared consensus among the masses. In order words, if all of us collectively do not believe in its value, it would be worthless.
Value of cryptocurrencies
As financial systems revolutionize with digital payment and online banking, money can be easily transacted and stored, existing as digits on our devices. As we transition into Web3.0, a new era sparked the growth of cryptocurrencies and what it can offer to replace the inefficiencies in our current financial systems. Where similarly, BTC is of its value today because people believe that it is of this price.
Other than the community, there are still many reasons why cryptocurrencies are so valuable in today’s digital age. Its decentralized nature allows individuals to perform transactions across the world, with anonymity, with a high level of trust. This is something that traditional financial intermediaries are not able to achieve, giving rise to mass adoption, and dramatically spiking its demand.
Furthermore, we could also consider that cryptocurrencies are scarce. Tokens like BTC have a limited supply in the market which makes it a great option for investors to store assets in the crypto space. Not to mention, these tokens are also deflationary in nature, where the value of your assets will not depreciate with time.
Cryptocurrencies serve a crucial role in revolutionizing financial systems, and they are here to stay. With constant innovation and attention from the mass media, we could anticipate having further spikes in adoption rates in years to come. We are definitely long-term bullish on the value of cryptocurrencies!