➡️ Think of buying cryptocurrency like exchanging money for a trip abroad. When you exchange dollars for euros, you're swapping one currency for another at an agreed rate. The same thing happens when you buy cryptocurrency—whether it's Bitcoin (BTC) or another crypto—you're simply exchanging one form of currency for another. This process typically happens on a platform called an Exchange.
Why does cryptocurrency have a "price" instead of an exchange rate? While we're used to hearing about exchange rates for traditional currencies like the dollar or euro, cryptocurrency is often discussed in terms of its price. This might feel confusing at first, but in reality, the concepts are very similar.
Price and exchange rate are essentially the same thing. Both reflect the changing value of a currency in relation to another. In the world of crypto, where values fluctuate constantly, these terms are often used interchangeably.
The price of a cryptocurrency is determined by the interaction between buyers and sellers on each Exchange. Each exchange has its own price based on market activity, but prices generally stay in sync across platforms. By aggregating prices from the main exchanges, we get an overall picture of a cryptocurrency's value at any given moment (we’ll dive deeper into this in another post).
Stay tuned for more insights! @ #learncryptoseries ✅
Read more: Learn Crypto Series: How to Buy Your First Cryptocurrency
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