The economy is a vast and strange world where numbers, figures, and tables play the leading role. Capital markets are considered as the main symbol of the economy. The main purpose of these markets is earning profits through buying and selling. Basically, in some capital markets (e.g., the stock market), profit is earned based on a rise in prices, while in some other capital markets (e.g., Forex), the profit is made based on a rise or fall in prices. However, in the cryptocurrency market, the story is a little different.
Although the basic principles of a capital market like profits, losses, supply, and demand, and pricing are present in the cryptocurrency market, fundamental differences can be found between the two markets with a deeper look.
The primary difference between the cryptocurrency market and other capital markets is the nature of traded goods. Cryptocurrency is not a physical or visible object. You cannot touch cryptocurrencies, nor you know to whom they belong. You can claim that you hold a share of a corporate or a factory in the stock market. In the Forex market, you can claim that you own a specific amount of US dollar or any other currency. But what about the cryptocurrency market?
A new concept in the economy
Cryptocurrency has introduced a new concept in the economy. This new concept is public needs. In fact, the basis of cryptocurrency formation was the attention to this public needs. To understand this point, take note that any cryptocurrency that is created or wants to attract funds has to execute a project. In simpler words, it has to address a need in a society based on this novel technology. This attention to the public needs is the reason for the growing interest in cryptocurrency and its usage.
Cryptocurrency and defined projects
Let us talk more clearly about the public needs and project-based nature of cryptocurrencies. Why does Bitcoin is a prominent cryptocurrency and has managed to hold half of the market’s value? Because it is being exchanged and therefore is considered as a currency. Without valuable physical support such as gold or oil, Bitcoin gained users’ trust and satisfaction only through the powerful
blockchain transaction system. The main need that Bitcoin was able to address is creating a secure and cross-border transaction system that has multiplied international exchanges. That is why many reputable online stores are creating a Bitcoin payment gateway in order to gain more customers from all around the world. The most important reason for Bitcoin’s success and popularity is the decentralized system or DApp.
It is a fact that governments and organizations would like to enter wherever there is a turnover and make profits out of it or use it as leverage. But Bitcoin is based on a blockchain, a decentralized system that tried to give users financial control instead of giving it to a group or a country’s authorities. In other words, there is no server or data center as a core in a blockchain. The lack of a data center has made it impossible to control a blockchain network centrally. Actually, a blockchain network is managed by users themselves and their hardware systems. This is a revolution in the internet and computer field.
In addition to Bitcoin, other cryptocurrencies such as Ethereum or Tether could fulfill their respective society’s needs based on a particular project. In fact, public needs have the biggest influence on cryptocurrency markets. A cryptocurrency will be more successful and popular if it can address a significant and important need. Just like Bitcoin!