The world of cryptocurrency is here to stay, and as people give it value as a store of wealth in the case of Bitcoin, its revolutionary payment processing ability and the ability to work between borders are all reasons to continue to use cryptocurrency.
With cryptocurrency being an emerging market and due to the changes, it imposes on the financial system, the market is still volatile, coupled with many of the factors above, the price of a coin can rise and fall quickly, making it a risky investment without proper research carried out, but the utility of them can make them usable for payments as well as an investment which was one of the original intentions behind Bitcoin.
The volatility is decreasing over time and this should hopefully result in lower volatility levels in the price.
When confidence in the traditional systems increase, such as the price of the U.S dollar going up, this can cause some people to go back to storing assets using traditional currency. This can have an effect on the price of Bitcoin in particular, and in turn the other cryptocurrencies, Bitcoin being the de facto reserve currency of the bitcoin world.
The value of bitcoins can be determined in different ways. For example, regarding their scientific value, coins have solved the Two Generals Problem. Beyond their scientific value, coins have technological value in that they are censorship resistant and can’t be shut down. They also have social value because they use public ledgers and decentralized systems, which removes the need for a trusted third party for transactions.
There is also significant design value in using them as currency, secure storage and a decentralized public ledger, and the cryptocurrency model encourages community contribution and collaboration. Other areas of value with coins relate to their network value, contract and application value, and their transmission and storage value, as they work for all of these things.
It boils down to perception of a majority, anything has value to someone because they believe it has value, for whatever reason they may have. The main factors affecting value of cryptocurrency have been discussed and summarized, and perception of value is what ultimately gives it value, what people are willing to put in to get a unit of cryptocurrency, be it time, fait money or labour.
The same applies to any commodity such as food, water, shelter, technology or any other commodity. Effort put into creating/obtaining it and demand.