Business

Coin Questions: How Much Is A Crypto Coin Worth?

Most people have no idea why the price of a crypto coin is what it is. Some of this confusion stems from terms like “total value locked,” “market cap,” and so on. Many times, value is not truly locked in a token, or other times we don’t know the true amount someone has paid for a token in fiat currencies since they don’t exist on the network.

Many powerful figures say they have no intrinsic value. If that’s the case, why are people interested in paying for bits of data?

Keep reading to know the answer to this and more!

Crypto Coin Value: How Is It Determined?

The factors that affect the price of a crypto coin — be with Bitcoin, Ethereum, Tether, TRON, or any other — can break down into a short list of seven major reasons that apply to any currency.

  • Supply and demand of a cryptocurrency
  • The place and method of currency exchange
  • Regulations and institutional acceptance
  • The internal governance of the cryptocurrency
  • Rewards for PoW (mining) or PoS (staking) verification
  • The cost of running the network (overhead)
  • The competition

Every cryptocurrency token or coin is made for a purpose. Some are pure currencies while others serve a purpose of utility. That means that some tokens have more or less intrinsic value than others.

Sometimes that value is as a financial instrument, such as DAI. Or it’s valuable because it’s a governance token, like UNI for Uniswap.

Every token has intrinsic value that fiat currency does not. It’s because it is generally secure due to reliance on blockchain technology.

Fiat currencies are a symbol that only obtains value from what backs it, such as a commodity, or governmental power.

Many people trade tokens based on the flow of value in and out of tokens alone, as tracked by ledgers. The truth is that it is much more complicated — no human could tell the real value of most coins or tokens at any given moment. Instead, they tell each other what they’re willing to sell or buy it for personally.

Also check: fusboxe

Why the Method of Exchange Changes the Value

That’s where exchanges and other forms of onramp or offramp come into the equation.

There is more than one exchange and each exchange has Bitcoin or another crypto coin at a slightly different value. So too, there are many different Bitcoin ATMs or cryptocurrency ATMs, like bytefederal.com. You can also buy on a wholesale or retail level directly from miners.

That is if you can outbid the large companies and exchanges soaking up every newly minted bitcoin.

Every exchange and operation runs differently and has different forms of overhead to cover. The service fees they use to pay for them and turn a profit are usually tacked on top of any network fees of the blockchain.

Exchanges usually run all their trades internally. For the convenience of instant trades, you have a myriad of fees to pay per trade, instead.

The Value of a Crypto Coin: Knowledge Is Power

What will you do with the knowledge that a crypto coin is different from one exchange to another, or one ATM to another? There are many apps that try to aggregate the prices to give you the best. What they don’t do is research the use-case of each coin.

Always do your due diligence, then you can offer the best prices for buying or selling. Need to know more about how to do that? Keep browsing our articles to find more news and information about how crypto and blockchain works!

Also check: isaimini 2021

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button