Unlike the U.S. dollars in your wallet, or some other currency all over the world, digital currencies aren’t backed by a central bank or even a government.
There is also no tangible fundamental factors with which to help derive an appropriate valuation. Whereas you can go through the earnings history of a publicly trading stock to estimate its worth, or the economic performance of a nation regarding GDP growth to value a currency such as the dollar, digital currencies haven’t any direct fundamental ties. Top Cryptocurrency Facts You Should Know. This makes valuing cryptocurrencies in a traditional sense especially difficult, or even impossible.