Can someone explain to me why a particular crypto currency could have a stable value?
My understanding is that a fiat currency's value comes from the amount of transactions that *have* to use it. There doesn't seem to be any significant barrier to people abandoning a particular crypto currency in favor of another one... unless I'm missing something.
No one can guarantee that cryptocoins would ever have stable value. The currency is only as good as the ecosystem that's using it. And because we are in the initial phases of people discovering it, it should be of no surprise that it fluctuates so wildly. The hope is that the value will stabilize over future as more people adopt it. And isitjustme is right, too many people have spent too many resources on mining existing coins, so they will want to hold on to them. That creates scarcity and thus value.
Off topic, but everyone should consider why you must be forced to use a currency, if that currency is the best to be using. If the dollar was the best currency to use, you shouldn't have to force or compel anyone to use it. Legal tender laws are force. Without them though the fed could never get away with such rampant inflation, that is their true purpose.
That's precisely how they deplete the value of what you're producing and then have fake wars to enrich their buddies.
Fiat Currency's value is also dependent on the trust of people for the issuer to adhere to international laws and maintain order and dominance. Why doesn't Saudi Arabia and China own their reserves in Russian Rubles ? Or Canadian Dollars? The reason is that the US$ is backed by US's guarantee to enforce its superpower status (military and economic) just like the British pound was backed by the Empire's Naval power and colonial empire 1.5 centuries ago. It's not merely a function of transactions or adoption. It's a matter of trust as well.
Bitcoin is generally relatively stable because it's the easier entry/exit point to USD. So when crypto values are falling - people are selling other coins and buying BTC since other coins can't be converted to USD easily
Partially right Bee.. Bitcoin stability is people moving from other crypto but also the trust of people that If crypto is to be failed, Bitcoin would be the last to go down.
I think it is based on many factors, Bitcoin stability is as discussed above so is true for Ether. Litecoin stability is because of many people wanted to try crypto but don't wanna pay as much as Bitcoin/ Ether. In general, I think crypto will stabilize, it is just not matured enough in the current market because it is not globally accepted as legal tender which I think will change in future. So many places have already started accepting Bitcoin as an acceptable currency. However, the instability is coming from the government threat. These government wanted to control the currency exchange because it will help them to maintain their own currency valuation and monopoly. One of the reasons why China did this past week because Chinese currency itself is struggling relatively to maintain the economy growth.
No crypto currency has a stable value and none ever will. Bitcoin is flawed technology that is only of use to criminals, and even there it's problematic since all transactions are public. There are a million and one ways to get hacked and lose all your money. The mining hardware companies, exchanges, and marketplaces are all run by criminals and con artists.
+++ ๐๐ I've been saying this for a long time - people want to make money without effort or exchanging goods/services out of thin air. Almost every time this ends up in a ponzi scheme(s). Sometimes it's very fun to see people's greed operate in realtime with some popcorn.
The main value in cryptos comes from features and the weight of the blockchain. The bitcoin blockchain represents a vast amount of spent computing power and electricity to make all those calculations. This creates a heavy chain with a huge investment. The value comes from that investment. I could create my own crypto, but the weight would be nothing compared to bitcoin. In terms of features, block time and fees tend to dominate. This is bitcoins current largest weakness as the fees are really high.
...but given how many alternative currencies there now are, it seems self-evident that there's not a terribly high barrier to entry. There's also the very real possibility of new currencies with new features being legitimately more useful.
You could go create a billion cryptos in a matter of minutes. The number is irrelevant. I don't have the numbers but bitcoin represents something on the order of billions of hours of computing power. That is where the value lies. The chain has so much invested capital that to recreate it would take an insane amount of money. That's why it's so valuable. Features are the bigger threat. Such as bitcoin cash with much better scalability that came as a fork of bitcoin so inherited the chain since the they've had about one exahash a second in computing power which is substantial. Or monero with its true privacy.