Explaining The Volatility Behind Crypto

For someone who is new to the concept of crypto, the concept might seem flawless, and something that will definitely stand the tests of time and prove to a timeless system. However, it just so happens to be the rule of this earth that every organized system fails against the test of time (an unorganized one falls even faster), but nothing can be done to stop this as it is bound to happen sooner or later. What appears to be good during the start of a said system might prove to be it’s bane during its decline. And thus, the unique selling points (and hence the best selling points) of cryptocurrency might be its undoing.

The USP of the system of cryptocurrencies is that it is all decentralized. Though it happens to be one of the best features of the crypto world, and the defining feature of the blockchain, the lack of a regulatory body is one that comes with its own gripes.

Considering that cryptocurrency is not backed by any physical entity, and is just an idea that people believe might be of some value in the future, cryptocurrency, in terms of physicality, is basically nothing. Thus, there is nothing stable to regulate it. If a lot of people want it, and the currency is in demand, it’s value rises. However, the scales may also tip, and no one one might want the currency, one fine day. Then, the value of the said cryptocurrency drops rapidly.

Another thing about the crypto market is that, instead of mining for cryptocurrency like Bitcoin, Ethereum, Vechain and Coinbase avis, people are trading these for other goods or valuables, or in return for other services. It doesn’t take Sherlock Holmes to guess that the price will go on a steady incline when there are lesser and lesser coins to mine. However, once there are no more coins left in the mine pool to mine (by the year of 2140), the price of the commodity is sure to be extremely volatile. It might either drop like crazy, remain where it is, or God forbid rise even higher, with trading being the sole use of different cryptocurrencies.

Thus, cryptocurrency is highly volatile though everything appears rosy on the outside to an extent. Some cryptocurrencies have managed to increase in value over time while the same cannot be said for others.