Why are cryptocurrencies valuable?



19 października 2021
Why are cryptocurrencies valuable?

Why are cryptocurrencies valuable?

Are you planning to start your adventure with cryptocurrencies? Do you want to invest in internet currencies, but you don't know where to start and how the exchange works? If so, you will surely be pleased that we have created this short guide especially for people like you, in which you will learn why cryptocurrencies are valuable and what to do to earn from them. Therefore, if you are interested, we encourage you to read on, and we guarantee that you will not be disappointed.

What are cryptocurrencies?

Before we move on to how cryptocurrencies have become one of the most popular payment methods, you should answer the question what they actually are and what the value of cryptocurrencies depends on. Well, often also called a cryptographic currency or a virtual coin, it is nothing more than a kind of accounting system whose task is to enable its users to conduct fees and transactions for specific items or services. Although at first it may seem that you cannot buy anything of value with a virtual currency that exists only on the Internet, it should be clearly stated that this is a very big myth. Until recently, using Bitcoin, it was possible to purchase a luxury Tesla car. Currently, the owner, Elon Musk, has opted out of this option and changed the cryptocurrency to dodgecoin. It is also worth realizing that the operation is largely based on a system in which each virtual coin had its own individual security key. The main purpose of this is to make it impossible to sell or spend the exact same coin twice. Taking this into account, it is therefore fair to say that cryptocurrencies are much more secure than the traditional money we use.

How do cryptocurrencies work?

Although currently virtual coins are not recognized by the vast majority of countries as official currencies, their popularity, and hence their value, is increasing year by year. Of course, Bitcoin turned out to be a real hit, but other companies involved in the production of cryptocurrencies are also following its footsteps. Due to the fact that they are not considered a currency unit, transactions made with them, as a rule, do not benefit from tax benefits. It is worth realizing, however, that this situation is completely different in the European Union. Why? Well, the Court of Justice issued a judgment that explicitly recognizes cryptocurrencies as a means of payment, which is why they are subject to VAT, but as a currency it is exempt from paying tax. Speaking of the principle of operation of cryptocurrencies, one should also mention what the so-called stablecoin is. Well, few people realize that this is nothing more than a specialized type of cryptocurrency, which is mainly used to buy other cryptocurrencies. In their case, the price volatility is small.

Where does the value of a given cryptocurrency come from?

Everyone is surely aware that some cryptocurrencies have very high prices. What it depends on? Well, value depends primarily on the principle of supply and demand. The rate of a given currency (regardless of whether it is an internet currency or not) is determined by the determinant of demand. As the willingness to invest in a currency grows, the more value it has. As for the cost of traditional currencies, it depends on many factors, such as the economic and political situation in a given country. It is worth noting that the political situation may also affect the value of the cryptocurrency, but not as much as in the case of traditional means of payment. The amount you have to pay for some of the most popular cryptocurrencies is staggeringly large. So where do such high prices come from? The value of internet coins depends mainly on the number of transactions carried out with them and the interest of investors. As for the second factor, the media are of great importance here.

What is cryptocurrency volume?

What is Cryptocurrency Volume? Well, the volume is nothing more than a kind of indicator designed to help in the technical analysis of the stock exchange. In a nutshell, it is a profit and loss statement that illustrates the profitability of investing in a given currency. Research is carried out on the basis of many variables, so it is worth doing it on a regular basis. The volume is often presented in the form of bars or charts, where the height will be synonymous with rising or falling prices.

We hope that thanks to this article you already know how cryptocurrencies work and what their value depends on. So if you want to start investing, do not wait any longer and start earning on cryptocurrencies today.

Attention! The above article neither in whole nor in part constitutes a "recommendation" within the meaning of the provisions of the Act of July 29, 2005 on trading in financial instruments or the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of April 16, 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6 / EC of the European Parliament and of the Council and Commission Directives 2003/124 / EC, 2003/125 / EC and 2004/72 / EC and Commission Delegated Regulations (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65 / EU of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment firms and defined terms for the purposes of this directive. The content contained on the website does not meet the requirements for recommendations within the meaning of the above-mentioned act, incl. do not contain a specific valuation of any financial instrument, do not rely on any valuation method, and do not identify investment risk.

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