Have you ever wondered why the number of cryptocurrencies is rising exponentially? There are now over 6,000 of these assets around the world. While it may not bother you at all, it’s important that you understand the underlying reasons for their emergence. Business on the part of the developers is primarily the driving force – they want to make money, in other words. But the upside is that they also aim to provide a better alternative to the existing banking system. They want to streamline the processes and eliminate certain issues associated with customer privacy. As you know, most digital trading platforms today have become a safe haven of wealth.
Still, a large portion of crypto investors and traders are seeking to grow their assets and become millionaires. The stories of successful Bitcoin investors would usually serve as an inspiration for the new players. No matter how volatile and unpredictable the crypto market is, they cling to the hope that they can find a way to reach the top. If you’ve been thinking the same way lately, you can take advantage of crypto media websites such as CryptoQuadriga. The team there provides the latest news and trends about the crypto market, as well as extensive price predictions. Meantime, to give you an overview of why cryptocurrencies keep rising, read the following facts.
Looking at the Whole Picture
Bitcoin was the first cryptocurrency ever introduced to the market in 2009. Just a few years later, after it has shown potential to grow into a big market, many developers have begun following the same step. While each coin has its own features and functionalities, they all share a common goal. That is to leverage blockchain technology and revolutionise areas, such as finance, energy, health, supply and logistics, and more.
Despite their popularity, some traders are clueless about why the number keeps rising. From hundreds to thousands, they can be noticed everywhere in the ecommerce industry. In fact, the Internet has been filled with crypto platforms promoting their brands among consumers. So, what’s really going on here? To understand the matter, you have to be aware that these cryptos have different functionalities.
The underlying blockchain technology that operates crypto trading platforms is one major reason why more coins are entering the market. It offers developers an opportunity to create different virtual currencies for different functionalities. There are those cryptocurrencies that function as currencies and can be used as a store of value. While others have a utility function, meaning they can develop as an infrastructure. They allow other cryptos to be built on top of their networks. You may also find cryptos that are generally called platform cryptocurrencies that are built on top of utility assets.
Cryptocurrency Offers Massive Returns
When Bitcoin became a phenomenal success due to its massive returns, many new cryptocurrencies were introduced to compete in the market. The global adoption of the technology is very notable. Thus, the industry is becoming increasingly popular even in remote places. Like bitcoin, the new players are hoping to traverse the same trail.
Some people may not pay attention to the new platforms at first, but once they appreciate value over time, traction will just follow. This happened to Bitcoin, and it might also be the case with the new coins. The boom of new cryptocurrencies would depend on several factors, including their use, acceptance, and ability to impact investors and traders.
The boom of Initial Coin Offerings
New cryptocurrencies would start generating funds for their operation through initial coin offerings. This also provides incentives to the prospective investors to join the market and evaluate the profitability of the platforms—one way to determine how stable and profitable the crypto platform is to check the whitepaper. The document contains all essential information about the project. Based on the contents, you can decide whether it’s worth your investment.
Notably, the Initial Coin Offering in the financial industry is followed by another in the supply and logistics sector, insurance, and gaming market. This wide adoption results in the proliferation of cryptocurrency. There are ICOs that are built on host platforms, while others have their own technologies. Essentially, each ICO has a native currency on which the network transactions are based. This means to say that if there are thousands of ICOs, there are also thousands of virtual currencies.
Innovation is at the Heart of Crypto
Another reason why cryptocurrencies keep on increasing is the pursuit of developers to innovate the technology and improve the state of affairs in the financial industry. That’s why there’s a constant effort to enhance the security features of many crypto platforms. This is actually common among various industries, but cryptocurrency has a special case because it involves large sums of investments.
Interestingly, the newer cryptos introduced to the market are usually the improved versions of the older ones. As such, you can notice that the emerging developments are concentrated on making blockchain technology and the crypto network a lot better. Innovation is at the heart of this goal because developers aim to satisfy users by offering secure and convenient services.
Know Your Limits When You Invest!
There’s a tendency for some investors to forget about the risks associated with investments because they focus on the hypes in the market. They are filled with excitement and sometimes follow the crowd making decisions without a valid basis. What do you think will happen if you adopt the same thinking? Yes, you might lose a substantial amount of assets because you have set wrong expectations and got into the business without strategies. The best practice is to set and observe your limits, especially if you are involved in a highly speculative market like cryptocurrency.
Final Thoughts!
Even if the cryptocurrencies entering the market continue to multiply, it doesn’t really matter if you know your purpose and goal. But your understanding as to why such an event happens could make you become an even wiser investor. You would be able to distinguish a profitable platform from the losing one. It usually comes down to the things you know about the industry that gives you an advantage over other players.
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