The Cryptocurrency Market: Who Runs It?
The simplest and most straightforward answer is nobody. Nobody controls or runs the cryptocurrency market because it was designed that way. Unlike banks and other financial institutions/marketplaces, which are mostly controlled by the government and regulatory bodies, crypto is the people’s market. It is a market of the people by the people and for the people.
Understanding Cryptocurrency
Cryptocurrencies are often not issued by a central body and do not exist in tangible form like paper money. Unlike a digital currency controlled by a central bank, cryptocurrencies often employ decentralized control. When a cryptocurrency is minted or generated before issuance, it is typically considered centralized. Each cryptocurrency operates using distributed ledger technology, often a blockchain, which acts as a public database of financial transactions when used with decentralized control.
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The Sovereignty of Cryptocurrency
No single entity controls the cryptocurrency market. Decentralized finance is intended to give investors and everyday consumers like you and me power over currency. Unlike fiat currency such as the U.S. dollar, crypto is generally not backed by governments and is not controlled by a central authority. The Federal Reserve can inject money into the economy at will with a couple of tools. Crypto takes that power away from centralized institutions.
The Complexities of the Cryptocurrency Market
Despite the decentralized nature, the market is far from a perfect democracy. It is a cesspool of conmen and scammers. However, understanding the players and their roles is crucial for anyone looking to navigate this sector.
The Roles of Market Players
The Little Fish
Little Fish as the name suggests, are modest participants in this massive cryptocurrency market. As an individual, a Little Fish has little influence in the cryptocurrency market. But when all of the small fish band together, they can either make or collapse the crypto market or the coin. These collective actions can drive the market up or down based on their combined buying and selling power.
Whales
Whales are individuals or groups of people that have the potential to cause havoc in the cryptocurrency market. They include well-known figures in the financial world such as chief executives or groups of investors with millions to billions of dollars in trading volume. Their belief alone can influence the cryptocurrency market for significant people such as CEOs who have a large influence on which cryptocurrencies to invest in.
Institutions or Creators
The term “creators” is rather descriptive. They are simply cryptocurrency creators. With over 1400 distinct cryptocurrencies in the market, ranging from those employing tens to hundreds of people to those with just a few engineers, the proliferation of cryptocurrencies is astonishing. Anyone can construct their own with relative ease, leading to the issuance of a large number of useless cryptos even when there isn’t enough money or time to create them.
Government
The rise of cryptocurrencies has been significantly driven by government regulations. Unlike stock exchanges where prices can be relatively steady due to certain standards, the cryptocurrency market is still in its early stages. Most Bitcoin investors make decisions based on speculation rather than facts. As a result, any negative news—particularly about future government restrictions—would result in a massive price decline.
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