Inflationary & Deflationary Cryptocurrencies
Inflation and cryptocurrency
Inflation and deflation are economic terms that describe the change in the value of currency over time. Inflation occurs when the price of goods and services increase, decreasing their overall value as a result. Deflation is when prices decrease, making items more valuable for consumers to purchase.
In cryptocurrency, inflation and deflation have a similar effect but come from different sources: supply and demand respectively. Some coins are designed to be more inflationary than others (or vice versa), while some cryptocurrencies have different levels of both inflationary and deflationary properties depending on what they’re trying to accomplish with their supply model.
Conversely, certain cryptocurrencies are designed such that they will always increase in price—no matter what happens in the market at any given time—which doesn’t make them particularly good investments because it means your investment has no chance of ever increasing significantly in value over time as long as you hold onto it as an asset instead of using it as currency like how you would use traditional tender like dollars or euros which can only rise so much due to supply/demand factors before hitting their limit caps if not being capped already; but this isn’t necessarily bad since most people don’t buy into altcoins thinking about returns anyway; rather they’re doing so because they want access into something new without having any outside influence affecting its potential growth potential aside from just speculation which could still lead somewhere worthwhile just not necessarily where everyone else thinks it might go (i’ll explain later).
Inflationary cryptocurrencies are those whose supply increases over time. Cryptocurrencies that have a fixed supply, like Bitcoin (BTC), are not inflationary. This means that the number of coins in circulation remains constant and the only way to increase their value is to find students willing to pay more for them. With an inflationary cryptocurrency such as Ethereum (ETH), on the other hand, there will be more coins in circulation after some time has passed.
Ethereum’s current monetary policy is designed so that its creation rate starts out slow and then increases over time until it reaches its final state of having 18 million ETH in circulation by 2140. Its creators believe this will make sure they can support enough developers without having too many tokens being sold off at once (which would cause prices to crash).
Inflation also works differently depending on what kind of currency we’re talking about because each type has a different way for increasing its supply:
- Deflationary: The amount produced decreases over time due to lost keys or hard drive failures; this generally happens with older cryptocurrencies such as Litecoin which have been around since 2011 but still haven’t reached their maximum supply yet even though their initial release was limited by design!
Deflationary cryptocurrencies are the opposite of inflationary, because the supply of coins is fixed.
In a deflationary cryptocurrency, the value of a coin increases over time as demand increases. This is because there’s no way to increase the supply of coins (except through mining). As more people want to buy and use this currency, its value rises because fewer units are available for sale on each exchange.
Mixing and matching
Mixing and matching is the perfect way to create a portfolio of cryptocurrencies. You could buy multiple coins, then trade them on an exchange. This can be done by purchasing one coin, waiting for it to increase in value, then selling it and buying another coin. For example:
- Buy Bitcoin at $100 USD per bitcoin
- Wait until Bitcoin has increased in value by 100% (which would be $200 per bitcoin)
- Sell your Bitcoin and use the proceeds from its sale to purchase Ethereum at $200 USD per ether token
Top 5 cryptocurrencies
The price of cryptocurrencies can be volatile, but their underlying technologies are more stable than ever. The top 5 cryptocurrencies (by market cap) are:
- Lite coin
- Z cash
- Doge coin
Bitcoin is the most popular and accepted cryptocurrency in the world, with a market cap of over $100 billion USD. It’s decentralised and has no central authority that issues new bitcoins or tracks ownership. This makes it a perfect medium of exchange and store of value — you can use it anywhere.
Bitcoin is also deflationary: its supply is capped at 21 million bitcoins and once all of those have been mined, no more will be created. The maximum amount possible to be owned by any one person is 21 million BTC (or about 0.0035% of total BTC).
Etherum, or ETH, is a cryptocurrency that was developed by Vitalik Buterin in 2013. The currency is based on the Ethereum blockchain. Since its inception, Etherum has been used as a platform for decentralised applications, smart contracts, and decentralised autonomous organisations (DAOs).
Ethereum was built to be an alternative to Bitcoin’s system of transactions with their own unique benefits:
- Smart Contracts : Smart contracts allow for agreements between parties and verification by blockchain. These agreements are automatically executed once certain conditions have been met by all parties involved. This can be done with no middleman required or any human intervention required at all!
Litecoin is a peer-to-peer cryptocurrency that enables instant, near-zero cost payments to anyone in the world. It’s based on an open source protocol existing across multiple computers around the world, utilising blockchain technology to facilitate secure and anonymous transactions.
The Litecoin network is scheduled to produce 84 million currency units. The value of each individual unit can be divided into 100 million smaller subunits known as satoshis — named after bitcoin creator Satoshi Nakamoto. In order for your transaction to go through on the litecoin network, you need to have at least one litecoin so as it can cover the transaction fee (which is currently 0.0001 LTC).
Zcash is a cryptocurrency that was created in 2016. It’s a fork of Bitcoin and has some similarities to it, but also some key differences. It’s a public blockchain and open source, allowing anyone to view the code. Zcash is also decentralized, which means it doesn’t have any central authority or third party controlling its network.
Zcash offers privacy and selective transparency of transactions—a feature that other cryptocurrencies don’t offer at all or only partially through mixing services like CoinJoin or CoinShuffle. While you can see all transactions on the public blockchain with Zcash, each transaction has two parts: one that is publicly visible (called an ‘open_transaction’) and another part (‘closed_transaction’) which contains information about how much money was sent by whom with what address(es). Only those who hold keys to certain addresses can access this part; this makes it impossible for others to know how much money was transferred between those addresses or where they are located geographically because there are no identifying features attached to them aside from their amount and sender/receiver details.”
Dogecoin is a cryptocurrency created in 2013, based on the doge meme. It’s currently the 6th largest cryptocurrency by market cap, and it’s used to send money online like other cryptocurrencies. In fact, Dogecoin has even been used to help fund charities in Africa.
The market is always changing, now to see how it affects cryptocurrency.
When you’re ready to start trading cryptocurrencies, it’s important to understand how the market works. New coins are always being introduced, and older coins can be rebranded or bought out by new companies. These changes affect the value of a certain cryptocurrency and how it can be used as payment method.
If you want to stay up-to-date with cryptocurrency news, check social media sites like Twitter where people talk about their favorite coins and how they feel about them. You can also read online forums like Reddit or Quora to get an idea of what others think about individual currencies.
Cryptocurrencies are an exciting technology.
Cryptocurrencies are a new form of currency that is built on blockchain technology. They’re not backed by a central bank and aren’t controlled by any government or central authority. Instead, cryptocurrencies rely on decentralized networks to verify transactions and prevent fraud through cryptography.
Cryptocurrencies are exciting because they allow people to send money anywhere in the world without needing permission from anyone (except when it comes to taxes). You simply transfer cryptocurrency from your digital wallet to another person’s digital wallet using an encrypted transaction on the blockchain network for proof of payment.