What are the factors that influence the growth of cryptocurrency?
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What are the factors that influence the growth of cryptocurrency?
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The technology behind a cryptocurrency plays a very big role. Decentralised currencies are resistant to censorship but even more so, it is nearly impossible to just shut them down. The value of a cryptocurrency can change very fast, but with time one can see that the volume of transaction has gone up while the volatility has kept dropping. It remains to be seen if this trend will continue. The chance of a significant correction in price has to be kept in mind. It is up to every trader and investor to weight for themselves the significant potential of cryptocurrencies with the risks that these currencies are still exposed to.
The prices get affected by the demand and supply for the cryptocurrency. Moreover, the supply for cryptocurrencies is limited which makes it a major factor in determining the price. Blockchain requires a huge amount of energy to operate and to mine the cryptocurrencies. Energy is also consumed to make the Blockchain more secure which affects the prices too. A cryptocurrency can be utilized as a mode of payment or as an investment. Depending on the usage and popularity of the cryptocurrency the price fluctuates making it prone to volatility. The perception and attitude of the public towards a cryptocurrency also determines the fall or rise of the cryptocurrency. Bitcoin is considered the reserve currency hence any change in the price of Bitcoin can influence the price of other cryptocurrencies. Any positive or negative action from the government with regards to cryptocurrency can influence the prices in a similar manner.