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The exchange rate of any kind of currency is essential for international investors to understand. For example, the current value of one US dollar in New Zealand is $1.68. As such, the value of a single unit of currency is 68% greater in New Zealand than in the US, which makes a huge difference when it comes to investing or spending large sums of money.
The importance of exchange rates only becomes all the more critical when discussing newer forms of currency, such as cryptocurrency. Cryptocurrency has a reputation for being incredibly volatile regarding fluctuating values, which has proven true over the past several years. While more traditional stocks and bonds may see substantial changes on a day-to-day basis, cryptocurrencies often see significant changes on a moment-to-moment basis. In this way, keeping an eye on the exchange rate and value of a cryptocurrency you may be investing in is essential to stay current and prepared for possible change.
To better understand how the values of cryptocurrencies and their exchange rates fluctuate, it's crucial to understand how various factors affect these values. For example, the ETH NZD rate is influenced by a combination of global Ethereum market trends and local New Zealand economic conditions, offering unique insights for anyone investing in New Zealand.
History of Ethereum
The first-ever form of cryptocurrency, Bitcoin, was founded in 2009. At the time, the revolutionary concept of digitized currency was even more innovative and ahead of the curve, leading to widespread rejection from society at large. However, over time, people steadily became more receptive to cryptocurrency as a technology, which continued to evolve and improve. As a result, in 2020, amidst COVID-fueled lockdowns and institutional unrest, cryptocurrency was embraced globally.
The initial impetus for the creation of Bitcoin stemmed from frustrations with traditional banking systems. In the aftermath of the US Recession of 2008, Bitcoin’s founders searched for a way that users could more directly take ownership of their funds. During the recession, there were constant fears and paranoia surrounding runs on banks, which could theoretically leave the bank empty and unable to give people their funds. This is because of the way banks function; there isn’t a little vault in back with your name on it where they keep all of your money.
Circumventing Traditional Banks
Rather, the bank keeps an extensive record of how much money you’ve given them, and is theoretically prepared to reimburse you any amount of those funds at any given time. However, the bank does not have enough money on-site to repay every single client simultaneously, which is why bank runs have proven so devastating in the past for both the US and New Zealand.
However, cryptocurrency presented a bold new option, in which these fears would be a thing of the past. The digitized currency would put the money directly into the users' pockets. However, like banks, even Bitcoin initially found itself overwhelmed by the number of investors. As a result of the pressure applied to this foundational form of crypto, Ethereum was founded in 2013 by Vitalik Buterin to help alleviate these problems. As a result, when crypto truly became popular in 2020, Ethereum was primed to capitalize on it.
Ethereum’s Global Pricing Future
Ethereum’s base price has been tied to the USD since its inception in 2013. This means that the US dollar's exchange rate directly affects ETH NZD's value. Investors would be well-served to track both ETH’s global moves and the NZD’s strength. Remaining aware of the exchange rate is a critical part of smart investing.
Although it may seem like a small detail, keeping abreast of the ETH to NZD exchange rate gives Kiwi investors a strategic advantage. For investors navigating both global crypto volatility and local economic trends, remaining informed about this rate can lead to better value assessment, maximized returns, and reduced exposure to risk in the developing digital marketplace.
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