Cryptocurrencies have a limited number of coins, which helps give them value. For example, Bitcoin is limited to 21 million coins, which must be “mined” by powerful computers solving complex mathematical problems. The value of cryptocurrency is largely based on public perception rather than government backing (like the British pound or US dollar), making it highly volatile.

Cryptocurrency is speculative, meaning that people buy or trade it because they believe its value may rise, not because there is concrete evidence for a price increase. Unlike virtual currencies in online games (e.g., Fortnite), investments in cryptocurrency can lead to significant losses, and currently, cryptocurrencies are not widely accepted for everyday transactions.

Who does cryptocurrency appeal to?

  • Various factors influence who engages with cryptocurrency.
  • Personal circumstances may lead some individuals to develop a more positive relationship with money, prompting them to invest in cryptocurrency as a way to improve their standard of living.
  • However, media and peer influences can encourage risky behavior, and vulnerable individuals might be attracted to cryptocurrency as an alternative to traditional money and banks.

Cryptocurrency and Social Media:

  • Influencers promote everything from fashion to sports, including cryptocurrencies. Companies pay influencers to endorse products because popular figures can sway their followers.However, influencers are not always accurate.
  • For example, reality star Kim Kardashian and boxer Floyd Mayweather promoted the Ethereum Max coin in 2022, and its value subsequently fell sharply. An investment of $100 at the time of the promotion would have been worth only $3 by the end of the year.