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How Does the Cryptocurrency Market Works?

How Does the Cryptocurrency Market Works?

The cryptocurrency market is decentralized, and there is no single authority or organization to control the market. Therefore, it runs across numerous nodes of computers. Anyone can buy or sell cryptocurrency through exchanges platform and can store in their preferred wallets. Cryptocurrency is digital money which can be used to buy services and products across the globe. However, we have to know the following information which makes the overall cryptocurrency market workable.

1. Stakeholders

These are Licensing Body, Bank, Exchange, Market maker, Brokers and Clients. Each body has a particular role in running the overall cryptocurrency trading. Governing Body provides the license or allows the exchange to provide the trading facility of cryptocurrency while cryptocurrency exchange plays a vital role for creating business and trading environment for each other market participants. The bank helps in the transaction and boosting the level of confidence in the market whereas the broker executes the business and are responsible for making traders or clients on their level. Clients are the actual user of cryptocurrency for trading as well as storing.

2. Blockchain Concept

A blockchain is a decentralized, distributed, and open-source, digital ledger which is used to keep transactions across various computers so that no alteration can be made in the block where the transaction information is stored. Blockchain is immutable for any change in a transaction which is making this very useful in the financial world.

3. Buy/Sell Mechanism

Anyone can open a trading account with legit cryptocurrency exchange with fulfilling the compliance. After that, they can have a trading platform in the form of apps or web trader or computer-based application to execute the trade. There are many legit cryptocurrency exchanges like Unicoin DCX which provide a world-class user-friendly platform and secured platform with minimum documentation.

4. Wallets

The wallet is a device physical medium program or a service which stores the security keys like public, private keys. It can be used to track ownership, receive or spend cryptocurrencies. It can be understood with the bank account number of any person where the fund can be received and transferred. There are so many wallets like online wallet, mobile wallet, a desktop wallet, hardware wallet and paper wallet.

5. Market Fluctuation Reason

  • Supply: The number of coins impacts the price of the particular cryptocurrency movement and it is one of the major causes of fluctuation.
  • Market Capitalization: Market capitalization is calculated by multiplication of total circulating supply to the price of each coin. In other words, it is a product of the coin's circulating supply and the price of each coin. The greater the market capitalization, the more the fluctuation in the digital coin.
  • Marketing: Marketing of coins enhance the values of crypto coins by creating demand by their marketing strategies which leads to movement of their value. More the coverage by media only enhances the values of the coin.
  • Integrated System: This also causes the fluctuation of the coin because it can be utilized to buy products and services, which ultimately increases the demand.
  • Major Events: Any economic or political activities impact the price of cryptocurrency as well, and news can impact negatively or positively as per the news correction. The government makes policy or allow crypto coin in circulation, then it increases the demand, and if it criticizes, then it devaluates the value.

Conclusion

Cryptocurrency market works similar to any other financial markets like Forex. However, cryptocurrency is thought to be more secure and decentralized than others. Cryptocurrency exchange, market maker, and bank are the stakeholders of the cryptocurrency market. Every institution or individual has their role for help to go on this market running. As this is technology-based, for buying or selling digital coins, anyone should have a trading account to execute the trade and wallet to store the coins. Blockchain technology provides an edge of security transaction with the help of unique cryptography.

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