When it comes to understanding the full scope of crypto, it’s admittedly not straightforward but makes a lot of sense with some simple explanations. Crypto value fluctuates constantly and sometimes depending on where you invest or keep your crypto changes how those fluctuations affect you.
Crypto Market Basics
And by basics, we mean basics. There is no need to overcomplicate your understanding of the crypto market as it’s not much different from traditional markets regarding value fluctuations. The more invested, the higher the value; the more sold or exchanged, the lower the value. Obviously, there are some loopholes and exceptions within that statement, but that is the basic rule of thumb.
Bitcoin, for example, is susceptible to dramatic value fluctuations. As more money is invested in Bitcoin, the unit value begins to increase meaning your investments gain value. When Bitcoin is sold or traded in high volumes the unit value begins to decrease. This can happen in short-term micro quantities or longer-term large quantities; no matter what it will always be on the move. This is the same for almost all other cryptocurrencies with the exception of some, such as stablecoins.
Crypto Exchange vs. Crypto Wallet
Jumbling these two things is common despite them being different. Simply put, a crypto exchange is where you purchase and trade cryptocurrencies with fiat currency (traditional currencies like USD or Euro for example) or other digital currencies. You can keep funds in exchange to trade, buy, and sell at ease. Although this is an option, most people choose to move their funds from an exchange to a digital wallet once they purchase the currency of their choice.
A crypto wallet on the other hand is where you store your cryptocurrencies, much like a physical wallet where you store your cash. If you want to invest or sell those funds you’d need to move them back into an exchange. Once the funds are in your wallet they’re yours. You can spend them or hold on to them.
Whether you keep your crypto in a wallet or an exchange, the value of that crypto will always follow the market value, and this is where a lot of new crypto adopters find themselves in sticky situations. Just because you move your funds to a wallet doesn’t mean their value is locked in, just the quantity. Let’s say you own one Bitcoin and you move it to your wallet. In your wallet will always be one Bitcoin until you decide to do something with it; the value of that one Bitcoin will always match the market value.
But that doesn’t always have to be the case. There is a category of cryptocurrencies known as “stablecoins” which are safe from dramatic value changes.
If you’ve read enough ForumPay articles, you should have a pretty good understanding of stablecoins by now. If you’re unfamiliar here is a quick explanation:
Unlike traditional cryptocurrencies that are known for their value fluctuations, a stablecoin maintains a stable value. This is because they are pegged to a tangible asset. There are different assets that are being used: gold, the US dollar, diamonds, oil, or any other hedge-able asset. Since cryptocurrencies can’t guarantee short-term stability, many investors and institutions look to stablecoins as a more risk-averse solution.
Stablecoins are a great option to exit and re-enter the crypto market without the need to cash out. This is important because of the volatile value fluctuations in the crypto market. Stablecoins are great because they allow investors to keep their funds in a crypto exchange without risking the value of their investments. If the crypto market begins to plummet, instead of paying fees and wasting time to cash out, companies or people can simply move their funds to a stablecoin keeping them safe from market fluctuations.
As crypto value constantly shifts, spending crypto sometimes comes with some concerns. If there is a wait time on transactions, the time a purchase is made and a transaction is confirmed, the value of that transaction could change drastically. Spending crypto can sometimes come with limitations as well. Not all platforms accept payments from any wallet or with any cryptocurrency and this can be frustrating for people with crypto accumulated in their wallet but nowhere to spend it directly. Alternatively, someone could sell their crypto for cash and then move their cash to a bank – but this is neither cost nor time-efficient.
Luckily there is a solution for all of those issues and ForumPay is it. ForumPay offers instant price determination meaning crypto is instantly converted to fiat the moment a purchase is made at the best rate available. This means no risk of wait time fluctuations. ForumPay is also wallet and crypto agnostic (yes, including stablecoins) meaning merchants have exposure to ALL crypto paying customers. This means using your crypto investments to purchase goods and services is seamless.
Learn more about stablecoins and crypto by visiting www.forumpay.com. And don’t forget to follow us on Instagram and Twitter for more on all things crypto!