The Cryptocurrency Market – Simple or Serious?

Ever since the boom in the value of cryptocurrencies, the financial ambitions of many people have turned toward it. At the end of 2017 and the beginning of 2018, people went crazy about joining the field and trading with the available assets. The popular demand led to the creation of common marketplaces in the industry – a cryptocurrency exchange platform.

Said marketplaces still don’t feature all possible crypto assets. This is due to the simple fact there are more than one thousand cryptocurrencies released up to this day. Some of them can and others cannot be traded. But the fact is the list of cryptocurrencies by market cap grows continuously. There are no signs that tech start-ups will soon give up on releasing new networks and assets.

It is quite natural that people who enter the market for the first time will feel confused and overwhelmed as to what is expected of them now. This feeling is induced because of the time we are currently in.

The Psychological Element

Cryptocurrencies created an atmosphere of adventure and intrigue around them, bringing so many profits to people that have closely followed the market from the start. Newcomers feel as if everyone has been operating in the market before them and they are nowhere as good as the rest of the people involved with crypto. This can often lead to discouragement and if you dive head-first – to mistakes. Always approach the cryptocurrency market with a clear head.

How Did the Market Come to Be?

It all started with the decentralization of Bitcoin. In 2009, Satoshi Nakamoto released his peer-to-peer network with its own digital currency that got the name cryptocurrency. It was the first one and is still the biggest one by market cap.

But just the creation of an alternative digital currency was not the sole reason for causing a revolution in the financial and technological fields. It was the blockchain technology utilized by the network that caused it and turned cryptocurrencies into a phenomenon.

Blockchain in Short

The blockchain is a publicly distributed ledger, a list of records that form the blocks of the chain. These records are encrypted, linked and secured through cryptography, from where comes the name of the currency used on the network. CRYPTOcurrency. One of the biggest advantages and innovations that came with the blockchain technology is the fact that data recorded in the blocks cannot be modified and is resistible to hacks. Meaning that whatever gets recorded on the blockchain stays there forever and cannot be misused and modified.

After that, as they say, it is all history. Bitcoin was the first cryptocurrency created and decentralized but was not the only one. Even though there was some skepticism at the start, today everybody has recognized the potential this new asset and technology possess.

Ever since the release of the first one, the industry and the market has been rapidly expanding. Some of the immediate competitors of the cryptocurrency have introduced even more innovative and advantageous networks and services on the network.

Are People the Driving Force of the Cryptocurrency Market?

The short answer is yes. People are those that led to the creation of such a market with their effort to become market makers. Their clearly expressed interest became a driving force behind the evolution of the industry.

Market Makers

When we are talking about the market making interest of people in the cryptocurrency industry, there is a slight difference with the traditional connotation of this term. People willing to buy and sell crypto assets quickly became market makers because at the dawn of the cryptocurrency market there still weren’t organized exchanges and brokers, actively orchestrating the activities in the market.

It might sound weird that people are the main driving force behind the cryptocurrency market but there are two key factors for that:

1. Supply – as we all know, cryptocurrencies usually have a limited supply, either available for mining or not. But at some point, it is clear for everyone that the number of units of any given cryptocurrency will end. All of them will be released in circulation and no more units will be available. This limited supply has one very important function. It raises the price of the cryptocurrencies just like a scarce good would be more expensive. You can figure by yourself that this limited supply is determined by the creators of the cryptocurrency.
2. Demand – given the limited supply of crypto units, people will have to be vigilant and act fast in order to acquire units faster than the competition. In addition to that, the increased interest in the cryptocurrency industry has greatly increased the demand for units. But not just for that but also for new alternatives, for new technology, and innovations.

These two factors greatly influence the prices in the market. We have seen sharp increases but just as sharp decreases in the value of the different assets. This is a result of the basic foundational economics and market logic. When the supply is limited but the demand is high, the price will rise. When the supply increases it is quite possible for the price to decrease.

Market Speculations

There are some market individuals and groups that purposefully speculate with the assets. They buy actively so that the price of the assets start increasing. They eventually become holders of quite expensive assets they can sell for profit. Alternatively, when they decide they want a certain asset to lose some of its value, they ‘dump’ their available amount and force the price down. These are some underhanded tactics traditional traders and investors find despicable. The online investment community thinks very poorly of such speculative tactics.

The Market – Not Impossible to Explore It

All of this might sound quite confusing and difficult for you, especially if you are a newbie. But the reality is much simpler. Cryptocurrencies are a mathematical child and they, as well as the market, are bound to logic. This means that even if everything that is going on in the market sounds difficult, you can still explore it and get the hang of it.

All that is required of you is some patience and the determination to learn. No one was born with the ready knowledge to succeed. Given the popularity of the industry and its assets, the Internet is full of free and useful information you can use and explore in order to increase and polish your knowledge of the cryptocurrency market.

But probably the best part of this new digital industry is the fact that you can easily participate. There are dozens of platforms, software solutions, brokers, and direct cryptocurrency exchanges you can sign up for. They allow easy and often – free access to use their resources. Most of them have been built in such a manner that they can accommodate interested parties at different levels of experience.

The only thing you have to do is be sure you are willing to join a volatile market like this one. Never risk funds you don’t have or jump at opportunities you don’t understand. The cryptocurrency market is a lucrative one but it is also a volatile one. Sharp price changes can both build and ruin your portfolio. So always make the next step knowing that your decisions are of great importance.

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