Surely you already know all the benefits of cryptocurrencies. You will also know that Bitcoin is valued much more every day and that it has become one of the most sought-after digital assets. Its price has not just stopped growing, and its performance as a bargaining chip has earned the market's confidence.
More and more businesses and service providers accept Bitcoin as a payment currency, and more and more payment systems have incorporated it into their portfolio. Still, even so, it is worth asking why cryptocurrencies are worth so much money. How is it that a digital asset can be worth more than ordinary money?
Since Satoshi Nakamoto, in 2009, released the Bitcoin system, this undeniable piece of great computer engineering known as blockchain or chain of blocks, has become the most important financial asset.
Although any government or company does not issue it, nor is it considered legal tender in any country, until now, it continues to gain value and preference over other financial assets. However, given the rise and popularity of Bitcoin, many other cryptocurrencies have emerged that, although they do not reach the values that Bitcoin has, they are still an excellent investment option.
But how do you know the crypto prices if no one controls them?
When we think of money, surely the image that comes to mind is that of the coin or bill. However, if we review the history, we can see that there have been many accepted means of payment. From corn, gold, silver, salt (hence the word salary), we will find many examples throughout history. However, the doubt is very great. Knowing how and why cryptocurrencies have penetrated so much in the world economy is a permanent doubt.
In the case of money and cryptocurrencies, acceptance is not everything. Not because a payment system is accepted, it automatically becomes a value system. For example, fiat money, which is common money as we know it, no longer has its value as if it had when it was anchored to gold. Now, they need the endorsement and certificates issued by monetary entities such as central banks. Governments determine the legal currency of circulation through laws and monetary policies, and through the mint, they can create as much money as they want.
But what does all this have to do with the crypto currency price?
They control fiat money or money issued by governments, and we already know how things work when a few control them. We should not be surprised to see the number of financial crises that have occurred in recent years.
Every time governments reach into the market, be it financial or any other part of it, disaster is served. In cryptocurrencies, being a decentralized system and not controlled by any entity or company, this is what happens. None of the problems related to money issuance, such as inflation, occur with this type of system.
The cryptocurrency prices depend on elements other than fiat money. The main element that establishes the crypto currency price, any of them, is the supply and demand mechanism. Any exchange good, the price depends on how many people demand the good and how many are available for sale.
The more people are willing to pay a certain price, the more set as the standard. So it is with any good. Depending on the number of transactions carried out at a certain price that will be the value that it will have in the market. Future transactions will be carried out, taking into account that reference price.