One of the most common challenges for people who are new to cryptocurrencies is the concept of value. How does something "made up" have actual value? This is a good question.
Let's think about cash for a second. What is cash, really, and where does it get its value? In most cases, cash is a piece of paper that is printed by a government. It has value, essentially, because enough people agree that it does. With cash, it is not the physical piece of paper that has value; it is what it represents.
Digital currencies acquire value in basically the same way - through consensus. When enough people agree that something has value and are willing to pay a certain amount for it, then it has value. In economics, this is the idea of "supply and demand." When there is a high demand for something and a limited supply, its value goes up. Conversely, when there is a low demand and huge supply, the value is low.
Because many digital currencies, like Bitcoin, were designed with a finite cap to the number that can ever be created, many people believe that digital currencies may represent a more sustainable alternative store of value than traditional fiat currencies.
Governments control national currencies and can print more cash whenever they want. On the other hand, only 21 million Bitcoins will ever exist.
Today, many digital tokens are actually tied to real-world assets, such as data storage, electrical grids, Internet of Things, devices, online trading platforms like CoinMetro, Parsiq and much more. The growing trend of tokenized assets is becoming an increasingly important part of the digital asset economy.
At CoinMetro, we believe that tokenized assets will play an increasingly significant role in shaping the digital asset economy. That's why we've built our platform to foster growth, exchange and liquidity in this space.
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