Diluting Value
Diluting value is a term used to describe how the overall worth of an asset or entity can be reduced when additional units are added. In the context of cryptocurrencies, dilution occurs when new coins (or tokens) are created and put into circulation. This increase in supply reduces the relative demand for each individual unit, which lowers its price per coin/token. For example, if there were only 10 Bitcoin available in circulation and then an additional 100 BTC was released onto the market suddenly, it would cause a decrease in value due to this sudden influx of coins on top of existing ones already being traded.
The effect that dilution has on cryptocurrency prices depends largely upon factors such as market sentiment at any given time and other events related to specific currencies like forks or hardforks taking place regularly with certain projects like Bitcoin Cash or Ethereum Classic respectively. Additionally, inflationary policies may also play a role depending on who controls them – central banks have traditionally been known to manipulate currency values through monetary policy measures such as quantitative easing programs designed specifically with this goal in mind; while more decentralized networks such as those found within blockchain technology tend not to operate under these same restrictions since they typically rely solely upon open-source codebase governance models instead.
