From my little knowledge. Cryptocurrencies are primarily used to buy and sell goods and services, though some newer cryptocurrencies also function to provide a set of rules or obligations for its holders.They possess no intrinsic value in that they are not redeemable for another commodity, such as gold. Unlike traditional currency, they are not issued by a central authority and are not considered legal tender.
I need help in understanding the crypto market and investment advice in order to invest effectively on bitcoin market
first i think you need to learn the basics of finance.. excuse any sarcasm.. its meant as humour not arrogance, so smile while reading what im about to say.
traditional currency redeemable for gold? .. umm.. hello 1930's where have you been?
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'intrinsic' value. is based on the labour needed to own it..
EG cost to mine gold/btc/crypto. and also its function or purpose adss some intrinsic value to the currency held.
for instance traditional currency. USED TO (generations ago) be backed by gold which value came from the cost to mine gold.
these days traditional currencies intrinsic value is only backed by minimum wage. EG US/UK min wage is ~£$7.50 meaning a £$10 bank note is intrinsic value of 1 hour 20 minutes of sweat laabour.
where by law if you do 1 hour 20 minutes of obvserved/provable labour (employment) you will get £$10 atleast
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yes in traditional currencies, and in gold markets the PRICE is not exact and fluctuates. but that is called speculation..
speculation is the bubbly bit of foam ontop of a value waterline. speculating can inflate or pop which is why PRICES change, but the underlaying VALUE is more stable
this is why at times of massive speculation. they say something is in a bubble period. because there is more bubbles than underlying value (price is more then double value)
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a bubble does not mean a currency/property/market is fake. it just means the PRICE is over inflated.
houses are real and houses have and always will have value. but the housing market has had bubble periods
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what you will find is that in crypto's HOW the coin is released to the community shows its intrinsic value and gives you a good starting point to calculate it.
periodic release coins are not all thrown out in one go. they are released slowly. giving it value as there is not a full supply right from the start
pre-mine coins are a term where the coins already exist befor public release and literally thrown out to the community. usually worth less value because of it
mined coins. involve actual computational work to be done. this can add costs like electric, equipment and time.. which usually means value would be higher(imagine robot labour) we call it (PoW) proof of work
stake coins. involve no 'work' as such. just proof of minimum investment to then be trusted to sign/validate. whereby its not labour lost but if the signer makes a mistake they lose the investment they used a proof. usually this means the coins value is less because the labour/cost is small. (imagine pre-nup/divorse papers, cheat and the wife takes it all) we call it (PoS)proof of stake
then there comes the featurs and utility.
some features are defined as unchangable(indelible, natural, esssentia) set in stone features. such as the coin supply(scarcity) which can add to the value.
but then there are features that can change and that then starts going into the speculative 'foam on top the water area'
Thank you very much for your input. This goes a long way
