You ever wonder what makes cryptocurrency so special? Is it the rarity of a certain coin? Perhaps the name carries its fame? Or maybe what the coin stands for creates its value?
These are all quite compelling factors, but there really are only two parts that complete the equation. SUPPLY + DEMAND = VALUE.
Let's start with supply. Bitcoin has a maximum threshold of 21,000,000 coins that will ever be produced. As I write this, we are roughly over 16 and a quarter million of them. As for demand, consider that more bitcoin transactions have been done this year than all the years combined previous in its existence, and you understand why it's worth roughly $2000 USD now.
Bitcoin is not the only cryptocurrency out there, mind you. There are several coins with a much smaller and more limited supply. Coins like 42 and 23Skidoo. There are also coins with massive quantities like DOGE or Bytecoin that even though it gets traded at a fairly high volume, the value of them will never be worth a coin with the same volume and lower circulation. There are also coins that were 'premined' - or basically artificially generated - like Ripple, Curecoin and Fuelcoin.
As you can tell, I am not a huge fan of premined coins, I believe they are fake, without any proof of work of them ever actually being mined, they just don't exist. I mean, I can imagine a coin and magically make a hundred million of them appear and put them on an exchange right? Why haven't I already done that...
Now Demand, that's what really drives a coin's price up. The demand for Bitcoin lately has just been phenomenal! In the past month, the value in USD has risen over 600%! Litecoin has shot up almost 400% and there are many, many coins I could list that have just exploded as new technologies and blockchain applications are invented. Have I mentioned I love this new digital era?