Polymathic
Honorary Master
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Does the blockchain have information about the currency value or is the currency value based on the open market in terms of supply and demand?
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Blockchains and currency value
- Thread starter Polymathic
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quovadis
Honorary Master
The latter.
Total & circulating supply is also a big factor that affects the price. Look at the supply of the top 10 coins: https://coinmarketcap.com/
Bitcoin has 16 million in circulation vs the 38 billion of Ripple.
In the dark & murky world of airdropped tokens (usually ethereum based ERC20 tokens that get dropped into your ETH address for free) they employ a common technique to drive up price:
1.) Create a token with low supply (1-3 million)
2.) Generate a load of hype and publicity
Once that token get's delivered to people and they start trading on an exchange the price is driven up very quickly. I've seen a token open trade at $0.05 and within 48 hours reach $1. If that total supply was 5 billion, there's no way it would reach $1 in such a short timeframe.
As to your question it's determined by the market.
Even if I created a token and wanted it to open trade at $1, the market would decide it's too expensive and nobody would buy, forcing holders so sell at a cheaper price which would pull the floor out from under the price until it was low enough that buyers decided to start buying.
Bitcoin has 16 million in circulation vs the 38 billion of Ripple.
In the dark & murky world of airdropped tokens (usually ethereum based ERC20 tokens that get dropped into your ETH address for free) they employ a common technique to drive up price:
1.) Create a token with low supply (1-3 million)
2.) Generate a load of hype and publicity
Once that token get's delivered to people and they start trading on an exchange the price is driven up very quickly. I've seen a token open trade at $0.05 and within 48 hours reach $1. If that total supply was 5 billion, there's no way it would reach $1 in such a short timeframe.
As to your question it's determined by the market.
Even if I created a token and wanted it to open trade at $1, the market would decide it's too expensive and nobody would buy, forcing holders so sell at a cheaper price which would pull the floor out from under the price until it was low enough that buyers decided to start buying.