How is cryptocurrency value established?

Some of the currencies have value because they are backed by some types of precious metals. And some have value only because people believe it is valued. Similar to most kinds of precious gems have. Cryptocurrencies are no different in that. They were designed as a type of unit that will be used for exchange without centralization of its value – without central bank or governments. This is a list of all the things that are influencing a value of cryptocurrencies.

post2aSupply and demand

Price for this types of currency is defined by their limited supply and by the level of demand there is for them. This is a basic economic factor, and it is affecting the value of everything. With each block completed the value of this currencies goes higher because there is a limited and finite supply of them.

Energy and Usability

The value also comes from the energy that is used to continue a blockchain. With every completed block, the next one needs more computer power and energy to be verified. Because miners are spending a certain amount of energy and time, and that amount is continuously rising, the costs to finish a single block are higher than before.  The explanation for usability is straightforward, If you cannot use a currency to buy or pay for something, it loses its value. The same is true if it is not easy to store and preserve the currency.

Finishing a single block

Because the difficulty of finishing a block and continuing the blockchain is getting higher, the value of a currency is rising. People need to invest more and spend more time mining to get a smaller portion of the reward. That is why its value is rising.


The first cryptocurrency that became mainstream is the Bitcoin, so the value of the rest currencies of the same type is influenced by the Bitcoin value.


They can manipulate prices of cryptocurrencies as same as they can manipulate stock options. By buying large quantities and pumping prices to sell high, they earn for themselves and are directly influencing its value.

System and government

If people are losing confidence in the traditional systems, the value of decentralized currencies rise. But if they are going back to paper money, losing interest in cryptocurrencies, it values go down. With rising taxes, a government can oppress and trivial cryptocurrencies. They can also decide to ban this types of currencies or make it official.

The rest

The effects on the value of this type also have the media attitude, which has the power to change the public perception. It is also important how widespread the currency is trough out the market and how innovative it is. In the end, the main thing that can change a value is a public perception. If the majority of people show their trust in these types of currencies and leave traditional centralized systems if they invest in mining, and innovative new ideas of cryptocurrencies, its value will considerably rise.