From What Do Cryptocurrencies Derive Their Value From

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Sometimes we often wonder how is it that cryptocurrencies are so valuable, I mean I at one point have often pondered this and from research I have come to gain a rather satisfying answer to this question that's why I will like to share my thoughts with the community and my followers.

I mean if we look across today there are many many asset that are really highly valued and we often wonder why that is so, cryptocurrencies like bitcoin, ethereum, bitcoin cash, BnB, and others that have good value in the market in terms of price and its no surprise for many to wonder where exactly do they derive their value from.

Why Are Cryptocurrencies Valuable

Well one of the contributing factor behind the valuation of cryptocurrencies comes from the fact that cryptocurrencies are speculative, a highly speculative asset class and volatile so due to this reason investors who love such high risk asset because of it's ability to offer return in some instances they buy it with the hope of the value appreciating over time now when many people have the same mindset and feel there will be reward for their investment and they all pour money into a crypto asset then we normally see a rapid increase in the value of that coin.

Also today around the globe cryptocurrencies is slowly gaining recognition and mass adoption as many individuals uses it as a payment method and most businesses uses it as a way of transaction and we should know that when this happens especially for a given asset that is being used by a business it often tend to drive the demand up higher an ofcourse the higher the demand the more likely the value of that asset to appreciate so the value of cryptocurrencies increasing is often subject to how they are being adopted in the global stage today by both business organizations and individuals and private enterprises.

Again cryptocurrencies derive their value from the purpose they serve or the value they actually provide as this cryptocurrencies especially most of them actually are created to serve a particular purpose which may suit the needs of some organizations, some cryptocurrencies have strong utility which makes it easier for people to adopt it more quickly contributing to the rise in it's value, as some cryptocurrencies are made more ideal for payment like the trx blockchain that processes thousands of transaction in lightening speed and ethereum blockchain that allows dapps to be built on its chain, all this makes it easier for this asset class to gain massive value in the market as people tend to trust them for the value they provide, they more they trust it they more they pour money into it.

Also last but not the least is something that is actually based on the law if economic which is the lower or less the supply of something the greater the demand and the higher the price, when an asset class is of limited supply it tends to appreciate more rapidly and that's the case with our very own bitcoin with it's fixed supply this makes it one of the scarcest asset class, limited supply leads to higher demand which leads to increase in price little surprise then why it's the most valued cryptocurrencies because they are scarce in nature infact everyone is in a rush to grab hold of this so this is another reason to show where cryptocurrencies value are being derived from.

Conclusion

The value of cryptocurrencies indeed spurns from many things like I have beautifully highlighted and things like these are what ensure its value it's maintain as people tend to hold onto things that are valuable it's only reasonable to hold on to something that offers us value and as we see most of this asset class has utility and purpose they serve so generally we shouldn't really be surprised that are so valued as they are for most a rare and scarce asset class