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Understanding Bitcoin-How Is The Price Of Crypto Currency Defined-Lesson 14

Invest In Bitcoin And Other Types Of Crypto Currency And Crypto Coins By Joining The BitClub Network

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Invest in Bitcoin and other types of Crypto Currency and Crypto Coins by joining the BitClub Network.

Author : Bitconnect
 

Many cryptocurrencies are not known in the public eye bar a few and the smaller ones typically have a cult following, so their prices are much lower than say Bitcoin, Litecoin and Ether. Many cryptocurrencies are reusing the Bitcoin code and just changing some of the specifications such as the coin supply, proof of work algorithm at https://en.bitcoin.it/wiki/Proof_of_work or adding other features. How much a currency has ripped off of Bitcoin with no innovation or potential utility over Bitcoin can affect its reputation. Price of Bitcoin. Bitcoin is often seen as the ‘reserve currency’ of the cryptocurrency world. Rises and falls to the price of Bitcoin often has a knock on effect with other cryptocurrencies. Litecoin in particular often has price reactions proportional to the rise and fall of Bitcoin price, but without the difficulty at https://bitcoinwisdom.com/bitcoin/difficulty increase that Bitcoin has in respect to the power used to secure both block chains. As Bitcoin was the first mainstream cryptocurrency and is the most supported, the price of Bitcoin can often influence the other cryptocurrencies. Media. The medias reporting on Bitcoin in either a positive, or negative way can have influence on the public perceptions of Bitcoin, and can influence the price. This can even be used as an avenue to potentially manipulate the price, as many media outlets are owned by a few individuals and it is a major vector for potential price manipulation, as well as reporting on positive and negative aspects of the currency which can cause the price to fluctuate.
 

Investors. With all cryptocurrencies, especially smaller less known ones, investors can manipulate / inadvertently affect price in the following ways: With a large amount of capital at their disposal, can buy a large percentage of the coin supply, then attempt to promote good stuff about the coin to ‘pump’ the price. An investor making a large investment in a small coin can cause inadvertent price increases and falls. People seeing investors have confidence in a cryptocurrency can encourage them to invest, and the more investors and the more demand for a currency, the higher the price. Scams. Cryptocurrencies can sometimes be developed as a scam. This can often be associated with a coin that promises the latest and greatest technology, but is also ‘premined’ by the developers before release. This ensures they hold a good chunk of coin supply before coin release so when it is given value they dump their holdings, which crashes the value for other investors but can potentially earn the scammers a large sum of money and it is often difficult to prosecute such scams and in many jurisdictions impossible at present. Instamining is a variant where the ability of coins to be mined is higher at the beginning after release to achieve the same goal. Investment scams often cause people to invest in a cryptocurrency or even pay money towards the developers to develop the currency, where the only intention is to run off with the money of investors.

Due to the public nature of a blockchain, premines and instamines can easily be spotted, and when discovered often cause the value of the coin to plummet, this can happen before or after the developers did their dump of coins. Market Dilution. This does not so much apply to Bitcoin, at https://bitcoin.org/en/ Litecoin, at https://litecoin.org/ Peercoin at https://www.peercoin.net/ or Ether at https://www.ethereum.org/ which all had a unique purpose at the time of development.

There are many a new cryptocurrency released every day, many rips from the Bitcoin source. Due to the number of cryptocurrencies often with no practical utility* saturating the market, alternative cryptocurrencies can find it hard to gain any sort of ground in an already diluted market. Bitcoin stood out as the first with good development, Litecoin stood out as a ‘silver to Bitcoin gold’ coin, Peercoin used an innovative POW and POS (proof of stake) combination. Ether had a practical utility for being a smart contract token to allow distributed, secure execution of smart contracts, for the price of what the ether token is, which very few cryptocurrencies can do. Innovation. With many cryptocurrencies being a clone of Bitcoin minus adjusting numbers, innovation is another thing which can affect price. Sometimes this results in a currency gaining ground, sometimes this alone is not enough but it is a price factor. The key innovations of some currencies are below: Bitcoin.
 

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