The Value of CryptoCurrency

Value of Currency

We usually use Japanese Yen for payment. For example,When we want to buy an apple at a shop,We exchange Japanese yen with an apple.As the same,when we want to buy something expensive, such as car,we buy it in exchange for money. At this time,Since both of us thought that the items and money paid were equal,the contract was concluded. However,why these papers and coins have the value equal to apples and cars? What is the value money have?

The Guarantee of Value.

Then,Let’s think at the state of shop sold apple.Why did you give an apple in exchange for money. It is because you know that the money you receive can be exchanged with the things. If the papers couldn’t be exchanged with anything,it were not be called “currency”.

Japanese Yen is managed by Japanese government and central bank, and they guarantee its value. On the other hand,the gift certificates, for example,which is available in only particular shops is guaranteed by the organization which issues it.

The Value of Cryptocurrency

Then,who guarantee the value of cryptocurrency? it is those who use cryptocurrency themselves. As many people act the contract by means of cryptocurrency,the situation that if we have cryptocurrencies, we can exchange them with various things was made,and the value as the currency forms without the guarantee of particular government and companies.
In other words,the ability to exchange them with items and services is the value of currency.

The Criterion of Value

On the contrary, anything that have the ability to exchange with items and services with any unspecified number of person can be called “currency” even if it were cryptocurrency,coins,or shells. Indeed,stones,shells and cows were used as currency in ancient. However,obviously,coins are appropriate to make contract than shells and cows.Then,what are the differences between coins and shells?

One of the points is the amount of circulation

While to make coins needs a lot of process and skills, such as making the metals melt,pouring into the template and so on, we can obtain shells easily at a beach.

For example,In the village,in which there are 100 shells,5 shells is equal to an apple.But when someone bring more from shells out of village,the balance between shells and apples are collapsed.
Actually, Germany issued lots of currency in order to pay the compensation of the First World War. as a result,the amount of the currency in the German, and the economy was collapsed. Governments usually manage the currencies for fear of the collapse of the economy and guarantee their values.

Another point of currencies is the measures against disguise.

To protect the value of currencies, government have to keep counterfeit money from joining the market,so nowadays coins and bills include a lot of the measures against disguise. For the cryptocurrencies,they mean the measures against the falsification of data and hacking.

Then, let’s see the structure and security of cryptocurrencies.