How is the value of cryptocurrencies determined?

To understand how the value and price of digital currencies are determined, we must first know the most important differences and similarities between digital currency and paper currency (such as the dollar and others). The most important and greatest difference between them is that fiat currencies are backed by governments and therefore declared as legal tender that can be used without any problems.

Where people put their trust in this currency and from here its value is derived. It is also affiliated with the central banks and controls them, and thus it indirectly controls the amount of inflation of these currencies. As for cryptocurrencies, they are not controlled by any central institution (government, bank), but are distinguished from traditional currencies in that they derive their value from people’s reliance on them as a medium of exchange and purchase of goods and services.

Otherwise, digital and fiat currencies are similar, as both currencies are considered a means of exchanging and purchasing products and services, and each has a relative store of value.

Watch the following video to learn how to determine the value of a currency

https://www.youtube.com/watch?v=OXxiNFdk2D4