Those who are interested in investing in bitcoin should know the industry before they invest any money. The market on cryptocurrency is growing exponentially and presents a large amount of opportunity, but with a large amount of price action resulting from speculation, investors need to do their research just like with any investment.
Looking at charts for the market, one of the most important factors is the fact that cryptocurrencies have a large relationship with one another. The largest of the cryptocurrencies by market capitalization, Bitcoin, has a large amount of pull in the market altogether. The two largest cryptocurrencies, Bitcoin and Ethereum seem to pull each other in both directions as the prices change.
One of the other factors in the price of these currencies is whether or not they fork. A fork is defined as a “change to the software of the digital currency the creates two separate versions of the blockchain with a share history. Forks can be temporary, lasting for a few minutes, or can be a permanent split in the network creating two separate versions of the blockchain. When this happens, two different digital currencies are also created.”
Although bitcoin has been a solid investment, it is also important to note that it is first and foremost a technology. On August 1st, a hard fork on the blockchain for bitcoin occurred resulting in the creation of Bitcoin Cash. Because of this, there was essentially currency created out of thin air, but it drove both prices upwards resulting in new highs. The price of Bitcoin Cash quickly went from $0.00 to upwards of $800 and then back to a reasonable $300.
The market on cryptocurrency is increasing exponentially on a daily basis, and as more and more get involved, it is only a matter of time before digital currency has a large effect on the world economy.