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Know What Drives Cryptocurrency Price

Today we are here to discuss cryptocurrency prices. There are many controversies and myths around the world right now on cryptocurrency price. We will be researching a few of them to vanish the cloud upon them for you. Let us have a basic knowledge of cryptocurrency first.

Definition:

• A cryptocurrency is a digital currency that works as a medium of exchange. Cryptocurrency uses cryptography to safeguard and verify transactions. Most importantly, cryptocurrencies are limited entries in a database that can only be changed if the specific conditions fulfill.

Now we will focus on our main point of how cryptocurrency works.

1. The factors behind Cryptocurrency Prices: 

•    The basic principle of economics demand and supply like other market prices also drives the cryptocurrency prices.

•    Another factor that determines the price is the token utility and its usefulness in the blockchain platform. Mining difficulty also affects cost.

•    As more severe mining difficulty makes it harder to increase the supply of a coin.

1. Cryptocurrency price fluctuation:

•    Liquidity – If we compare the established or traditional market, the cryptocurrency market does not offer as much liquidity. The difference in total market cap between fiat currency and cryptocurrency is over USD 89 trillion. This difference is as vast as a difference of 36,000 percent. So, we can conclude that the crypto market lacks liquidity.

•    Daily trading volumes – Cryptocurrency daily trading volumes fluctuate at around USD 14 billion. On the other hand, traditional markets deal at approximately USD 5 trillion.

•    Market – Here is something that may attract you to this crypto market as the market changes quickly; there is a high chance of an increase in the volatility of digital currencies.

•    Adopters – Some good news for the crypto world is according to recent reports over 100,000 new adopters were becoming part of the digital currency industry daily. Many new users have a vested interest in whether specific cryptocurrencies move up or down. It is a significant factor that is adding up to the volatile nature of the market and driving up disruption.

•    Price manipulation – The manipulation of prices is widespread in newer markets. Central exchanges manage the flow of cryptocurrencies, which means they have a lot of motivation to grow their revenues. It is done by ruling the feeds of the prices displayed to get traders to buy or sell particular currencies.

1. Most significant determinants of cryptocurrency prices:

•    The basic economic principle “Supply and demand is the most important determinant of cryptocurrency prices,” works for the crypto market as well. The cryptocurrency’s value will drop if a cryptocurrency has a high supply but a little demand from traders.

•    The main reason behind the scarcity element that boosted up the price of Bitcoin climb to its highest levels. The quantity of Bitcoin is capped at 21 million BTC while the demand has rocketed in recent years.

•    If a token gets negative publicity, generally the price of that coin takes a dip. While, if a coin gets high profile support and good media coverage, the cost would almost certainly increase. Which means human emotion and hype influence prices.

1. Price change of cryptocurrency over the past few months:

•    We will take the particular case of Bitcoin here to compare our tracking of fluctuation in the Crypto market. As Bitcoin is at highest-grossing, so we choose Bitcoin as our option in here.

•    Bitcoin started 2017 at under USD 1,000 and took a dip when China announced investigations into cryptocurrency exchanges in the country. The price of Bitcoin dropped to around USD 775 and the overall cryptocurrency market cap stood at close to USD 15 billion.

•    By April 2017, Bitcoin got legal in Japan that helped the price to jump back up over USD 1,000. The market cap stood at around USD 26 billion at that stage for the cryptocurrency market

•    On Sept. 4, China banned ICOs. Bitcoin dropped to about USD 3,300 by mid-September 2017, but by the end of September 2017, it reached well over USD 4,000. The cryptocurrency market cap was just below USD 150 billion at this point.

•    At the end of January 2018, the price of Bitcoin came back down to around USD 10,000. It reached lows of USD 6,000 in February 2018. It again pushed back up, passed over USD 11,000. The overall market cap recovered to about $500 billion.

1. Accuracy of prediction of cryptocurrency:

Like the traditional market, the crypto market also cannot be predicted accurately and positively. Here are some factors to help you get a picture of the future demand for cryptocurrency.

i) The nature and level of regulations introduced in dominating cryptocurrency markets.

ii) The level of cryptocurrency acceptance in the coming year and beyond.

iii) Growth in the cryptocurrency futures market.

iv) The advantage of tokens and the ability of technology to solve real-world problems.

Concluding crypto-assets and fiat assets have seen many fluctuations widely in price. By studying the past price history of crypto assets, we may be able to make reasonable assumptions about the future or maybe not. Please share your views with us.

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There are several factors that affect the prices of Cryptocurrency, understanding the trading price is quite difficult. I have got the article read and know how cryptocurrency price works!

Every month there is new trend in the cryptocurrency world. Before we talk about new trends lets know how it works first.

Click on the link to know!

Today it’s all about security token offering or in short STO. We will be discussing different aspects of STO and will try to give you a clear idea about it. So, if you are interested in STO, let’s start. First thing first, the definition. It is a process like Initial Coin Offering where one can exchange money for coins or tokens that is an equal amount as of their investments. The only difference being that STO provides tokens that are linked with a crucial investment asset in a way like bonds, stocks, real estate, or other similar funds. Let us have some knowledge about the security of traditional finance. Securities represent ownership of a company like stocks. Here the owner can have perks from capital gains on the assets or can get returns in exceptional cases. The owners can be from private, public companies, but the common part is that they are empowered to some form of proprietorship of the company. Securities play an essential role in finance, and it is strongly connected with STO in their potential to be leveraged for raising funds. Companies can enhance a tremendous amount of sum via Public offerings, and the government can even issue municipal bonds to boost funds. It is possible to trade Public securities on major stock exchanges and can be shifted between investors on secondary markets as assets. So, why should one use STO over others? Here is the list of the advantages: •    Credibility: The space of ICO is chaos. There are many cases where people were scammed, and many more are stuck with useless tokens. In STO, they follow the proper regulations and allow cryptocurrencies to recover some credits. •    Improving finance: Security tokens makes it easier to provide services at a lower cost, whereas the traditional finance systems are very slow and also pretty expensive. •    Programmability: Security tokens come with the advantage of programming, which makes it able to be enforced by smart contacts. •    Free Market:  Security tokens are like birds and rivers. They are not bounded by the boundaries set by countries or any such local regulations, making it a free-flowing market. •    Investors: The traditional security deals are limited to only the local individuals. But as the market in security token is free-flowing, so it is open to anyone and everyone who are and can use the internet. So, in general, the number of investors in security tokens are much higher. •    Reduced rate of Manipulations: As the market is free and is easily accessible to anyone with the knowledge about security tokens. So, the number of intermediaries is cut down to a considerable amount, which reduces the chances of institutional manipulations, making it cheaper and better place to invest. As the theory and history suggest, the more people involved, the more chaotic a situation gets. As security tokens are almost in direct relation with investors, so these chances are also reduced. •    Liquidity: Security tokens are traded on specialized security exchanges. This is the reason the investors have a more convenient way to liquidate their investments. How to make sure if a token is a security? The answer lies in the Howey Test. The token has to pass the Howey test to get recognized as a security. The Howey test have the following criteria 1.    It has to be an investment of money. 2.    The investment is in a joint enterprise. 3.    There must be a prospect of profit from the work of the promoter. How can one participate in STO? If a company wishes to issue security tokens, they can do so by taking help from multiple market participants that includes •    Issuance Platforms: The company can formally issue their tokens to the investors through an issuance platform. Developers for issuance platforms also function on standardized token interfaces that hard-code regulatory parameters into token contracts. •    Custodians: They are famous for storing digital tokens> Custodians often have a partnership with exchanges or issuance platforms. •    Exchanges: Exchanges helps the investors to trade security tokens, empowering them with better access to their capitals, boosts secondary liquidity and equalized investors access to securities. •    Broker/Dealers: Generally, investors do not opt for them, but if someone is hiring a broker, they help them with areas and ways to invest in security tokens. For conclusion, I will say that since early 2018, security tokens have emerged as a sensible use case of blockchain technology. And security tokens are the right combination of conventional financial instruments and digital assets.