People were first introduced to the idea of cryptocurrencies in 2009. Although it wasn’t as well-known as today’s, the product that was entering the market was groundbreaking.

In 2022, after more than a decade, practically everyone, especially those with a background in finance, will be well-versed in cryptocurrency. People who once invested in stocks, real estate, and other forms of investing sectors are, interestingly, taking part in purchasing and holding various cryptocurrencies in their wallets.

Currently, there are two types of people in the cryptocurrency sector: investors and miners. While investors are busy learning about programs and exchanges where they may trade in cryptocurrencies, miners utilize their processing power to participate in the network and create new coins and tokens.

In all this mining and trading process, one component that has kept this currency steady and the network security is the blockchain technology. However, the value of cryptocurrencies is unaccountable and unmanageable.

How is the Value of Cryptocurrency Determined?

Many people ask questions about why cryptocurrencies like fiat currency can’t be managed and controlled, and there is one particular reason: decentralized and centralized structure.

Traditional currencies, including the US dollar, British pound, and Euro, are governed by a centralized system. An entity that controls and regulates the currency is referred to as having a centralized structure. Governments and banks regulate fiat currencies, including their formation and supply, and several factors are at play, such as inflation.

On the other hand, cryptocurrency is entirely built on a decentralized framework. The production and supply of cryptocurrencies are not subject to regulation or management by any government or bank anywhere in the world. 

The decentralized nature of cryptocurrencies severely limits the involvement of third parties; thus, everything from mining cryptocurrencies to maintaining network security is controlled by the miners currently active on the network.

There are many similarities between cryptocurrencies and fiat. Both currencies, for instance, can be used for trading and investing. Similar to using fiat currency, buying products using cryptocurrencies is simple. However, there is no definitive mechanism to determine the price of cryptocurrencies.

Cryptocurrency is Open to the Public

Cryptocurrency, as was previously said, is based on a decentralized structure, which implies that it is distant from being managed and controlled by any outside entity. 

Considering that all transactions are broadcast as blocks over the network, these blocks are inaccessible to any third-party entity. Yet, anyone can view the block holding the transactional information.

Crypto’s Node Count

Currently, hundreds of wallets are available, and finding the legitimacy of each is quite difficult. Here, node count offers a method that enables a user to quickly determine whether the coin’s value is real or has been inflated artificially. A user can determine a cryptocurrency’s price by looking at its node count and market capitalization.

Node count can also be used to gauge a crypto community’s stability. The community is intended to be stronger with a higher node count.

Crypto Exchange Platforms

People interested in learning more about cryptocurrencies can visit and look around a number of cryptocurrency exchange platforms. For instance, it’s simple to find information on exchanges regarding a cryptocurrency’s price, market cap, and other factors influencing investment choices.

Cryptocurrency Price Calculation

Analyzing a cryptocurrency’s market demand is one obvious way to determine its price. Cryptocurrencies with high demand and little supply are anticipated to have high prices. In comparison, a cryptocurrency with higher supply and lower demand is predicted to lose value. The complexity of the mining process itself may also have an impact on a cryptocurrency’s price.

Broad Usage

A cryptocurrency’s price might rise dramatically if it is widely used and popular. However, given that individuals are still wholly reliant on fiat cash, widespread usage appears to be incredibly unlikely. Crypto must be widely used for it to have a chance of becoming widely used.

Volatile Nature

Fiat currency has existed for many years, while cryptocurrencies are still relatively new on the market.

Compared to fiat, cryptocurrencies lack stability, which is one of the reasons why they are more volatile and has been a topic of concern.

Many people attempt to consume the coins while waiting for the price to soar so they may sell, taking advantage of this. This eventually also causes price fluctuations, discouraging investors from investing in cryptocurrencies.

Also Read: All You Need to Know About Cryptocurrency Difficulty