What makes a cryptocurrency valuable?
The value of cryptocurrency certainly comes from its usefulness in the market, its supply, demand, and the benefits it gives people, which comes from the aspects of and the extent of the network it has, its innovation and usefulness in business, as well as its features.
The technological value of a coin is not something to ignore in the modern world given that most coins try to solve various technological barriers, for instance in the areas of IoT, and to link technological systems such as fiat money, digital assets, and computer protocols.
An example is IOTA, a protocol that can be used on IoT devices and machines, and for ensuring data integrity in information sharing. Others like Neo integrate digital assets, digital identity, and smart contracts into their platform. Cryptos of the future will have business models and invest in technology that extends current technology and that solves real-world problems.
Cryptocurrencies are censorship resistant, conceal transaction identities to some extent and can't be shut down, which is another aspect that adds in some value. Since they use public ledgers and decentralized systems that eliminate the need for a trusted third party to accomplish transactions, cryptocurrencies are thus thought to have some social value. Cryptos such as Steem interlink social communication channels that people use on a daily basis with digital assets and money, and are thus thought to have good social value.
In addition to providing secure storage and decentralized management of digital assets (without depending on the central bank), they also encourage community contribution and collaboration. Some cryptos have value based on the value of network they have -- number of people using them, the contract and application value and storage value. People are able to come together and collaborate on projects.
Below are some of the things to look for when evaluating the value of any cryptocurrency:
1. Business concept
The purpose and reason for creating the coin determine whether it is appealing and unique or not. This also determines whether people will have any interest in buying it or not.
2. How useful or utility of the coin
Usability and ease of usability of the coin inside the real-world market application are also important because it determines whether or not people will accept it in trade.
3. Nature and extent of its infrastructure
For every valuable coin out there, there has to be enough infrastructures that propel and fuel the concepts and goals ahead for a long time. This includes technology infrastructure to allow linking to other digital systems and related platforms, collaborations with like-minded companies, and investments in related channels.
4. Size of an active community
The larger the number of people backing up the coin right from the crowdsourcing level, the better. The community includes people who are actually using the coin in their platforms, businesses and day to day engagements.
5. How active and knowledgeable the admin is
The power of the development team and administration will determine the success of the coin simply because they hold the future plans, goals, and endeavors of the coin. They are the ones who determine what infrastructures to invest in, what technology systems to work with and whether to continue or stop promoting the business.
6. Supply and demand
The utility and limited supply help in giving value to metals, for instance. A limited supply allows people to pay more to have those coins they think for value and vice versa.
Type and nature of, or influenced by investors
Investors can manipulate and affect the price of a cryptocurrency in various ways. For instance, buying a large percentage of the coin supply and trying to promote good stuff concerning the coin in order to lift the price. By making a large investment in a small coin, an investor attempts to promote and affect the value of the coin. When people see that investors have confidence in a coin, they tend to get encouraged to invest in that currency.
7. Public perception
One of the very important factors in the price of a cryptocurrency is how people react towards a certain coin. The reaction will have either a negative or positive impact on the value of a cryptocurrency.
Other factors that determine value include credibility and trust in the public eye, scams, and history of previous projects run by the administrators or owners of the crypto.