Understanding Different Factors Affecting Cryptocurrency Values as a Bettor
With the coming of cryptocurrency into the online sports betting industry, there are a variety of coins out there. Upon taking a good look at the sportsbooks which accept cryptocurrencies, it is not strange to see that these sportsbooks offer a variety of coins to their customers. Check out CryptoBetting for the best crypto sportsbooks.
These coins range from Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Doge, etc. Cryptocurrency has been widely accepted, thanks to the anonymity and security offered to its users.
However, one thing players need to have in mind is that each cryptocurrency has its value. This text helps you understand what determines the various crypto values.
This occurs when an original version of a cryptocurrency gets split into two versions. The one with the original code and the one with the newer code. This is what occurred between Bitcoin and Bitcoin cash, as well as Ethereum and Ethereum classic. These coins can still be traded, however, when such an event occurs, i.e.it is referred to as Fork and it could have a huge effect on the value of the cryptocurrency where there is no agreement between the miners and other contributors in the network.
Node count is another good pointer in understanding values of cryptocurrency. By node count, this refers to measuring the number of active wallets existing on the network, which can be checked up on the currency homepage or generally, on the internet.
In analyzing whether or not a currency has a fair value, the node counts together with the entire market capitalization of such crypto can be looked up, and then further compared with other cryptos.
Like everyday economics, Supply and Demand are big factors that determine the value of anything, this includes digital currencies. For instance, if the number of people who wish to buy Ethereum are more than those who wish to sell, then the price goes higher since it is in high demand. And in the cryptocurrency industry, considering the fact that the supply of most cryptos is limited, their popularity has made their prices go higher.
However, where the demand goes down, say, for instance, where such a coin is at the centre of a scandal like being subjected to hacking and the demand reduces. In such a situation, the price declines since many traders of such coins wish to sell so as to recover profits made before such coin crashes.
Where a currency is largely acquired by many persons, the value of such currency could get very high. This is due to the fact that most currencies have their limits and where there’s an increase in demand, prices shoot up.
However, what are the factors required for cryptos to actually become mass adopted? A factor is how applicable the currency is in real-life circumstances, that is, whether it is largely accepted as a method of payment. Whereby crypto is used in our daily living like fiat currencies of today, then in the future, such crypto is in a good situation to perhaps play a vital role.
Inflation of fiat currencies
Where the prices of fiat currencies fall, then the price of cryptocurrencies would increase in respect of the currency. This is due to the fact that more of the currency can be got with your cryptocurrency. This experience can be seen since central banks, the ECB, and FED have continuously printed money, and artificially reduced the interest charges.
Cost of Production
Both the actual cost as well as opportunity cost of making coins also determine the value of cryptocurrency. For instance, let us take Bitcoin, for example, its cost of production is high. When looking at the reasons for this, one can see that mining has made use of a lot of energy and resources, hence its high value.
The direct costs and opportunity costs of producing a coin are also factors that determine the value of a cryptocurrency. Bitcoin, for example, has a high cost of production. The resources and energy that have been put into the mining of bitcoin can be seen as a reason why the bitcoin has value. Based on research, it has been provided that electricity costs of mining the cryptocurrency ranged between 400 million dollars to 6.2 billion dollars yearly.
Although it could appear that the energy and resources are a waste, this is the only effective means of providing safety for users.
The lack of regulation is also a contributing factor to the value attached to cryptocurrency. If crypto becomes mainstream, then it will more likely be regulated by governments, this could lead to the centralization of digital money and as such, would have a huge effect on the price and value ascribed to crypto coins.
In all, it should be noted that one main feature of cryptocurrency is volatility. The value of a crypto can get altered instantly, however with time it can be observed that the transaction volume has increased while the volatility was reducing. It is best to cross our fingers to see whether the trend will go ahead. It is up to each investor and trader to consider for themselves the substantial potential of crypto with the risks they are subject to.
Various factors determine the long-term value of the majority of these digital currencies like getting mass adopted and the actual value that such currency brings for daily living (when considered side by side with other conventional means of payment). Whether the cryptocurrency will be accepted by the governments or fought against is also a crucial factor in determining the value. Finally, the safety and usability of cryptocurrency is a key component, how safe and usable crypto is in our daily transactions is very important in understanding the various cryptocurrency values.
All of these joint factors make it quite hard to properly foresee the value of crypto coins, but on the other hand, they also maintain the interest of investors and traders in the crypto market.