Bitcoin cryptocurrency developed in 2009 has recorded many transactions recorded in a blockchain. A blockchain displays the transaction history and proved ownership.
The bitcoin cryptocurrency price is not regulated by the central bank or any government, as they are not under them. In addition, unlike the traditional stocks or bonds held, bitcoin is not a corporation, and therefore it’s not regulated.
So what determines the bitcoin’s price?
Bitcoin is influenced by factors outside of the standard monetary policies, inflation rates, economic growth, etc. Its influence includes
The demand of the market and the supply of bitcoin
The supply of bitcoin is done in two ways
- Bitcoin governance allows new bitcoins to be created at a fixed rate. When new bitcoins are introduced in the market, the miners’ process blocks of transactions and the rate at which the new coins will sell is designed. The speed can be attractive and hence the rise in demand for bitcoins at a faster pace. With the demand rising, the supply must be catered for by driving the price high. This slows the bitcoin circulation growth intentionally.
- Second, the number of bitcoins the system allows must meet the supply. The number is capped at 21 million; miners will no longer create any more bitcoins when this number is reached. For example, by December 2020, the supply of bitcoin reached 18.587 million, representing 88.5% of the supply of bitcoin. Once 21 million bitcoins are sold, the circulation and prices depend on whether it is considered practical, legal, and in demand. The popularity of other cryptos only determines this.
The cost of delivering a bitcoin through the mining process
Bitcoins are virtual, but they have created products that incur an actual fee of production.
Electricity consumption is the most critical production costs. Mining is a complicated cryptographic math problem that miners compete to solve.
The first one who solves is rewarded with a block of newly minted bitcoins and any transaction fees accumulated since the last block was found. The bitcoin production allows only one block of bitcoin to be found, on average, one every ten minutes. The more miners, the more expensive the coin will be to solve it under the 10-minute interval.
The number of competing cryptocurrencies
Bitcoin is the most well-known cryptocurrency. However, there are hundreds of other tokens fighting for the same recognition. Bitcoin is the dominant option in market capitalization. Other coins include Tether – USDT, Etherrum – ETH, Cardano – ADA, Binance Coin – BNB, and Polkadot – DOT, among many others. These mentioned are only the few that have been close competitors as of March 2021.
Internal governance
The trade markets and governments does not govern Bitcoin. It relies on miners and developers to process the transactions and keep the blockchain secure. One thing that frustrates the bitcoin community is software changes, as fundamental issues take along to resolve.
The scalability issue is also a problem, as the number of transactions processed depends on the size of the blocks.
Bitcoin software is currently able to process only three transactions per second. This speed was not a concern when there was little demand for cryptocurrencies. However, with the growing demand, an increase in commerce, it is a cause for worry.
The cryptocurrency community is divided over the best way to increase the number of transactions.
Regulations and governing of sales
The popularity rise of bitcoin and other cryptocurrencies has caused many debates to come up.
Regulators are debating how to classify such digital assets because they are classified differently by various platforms.
The Securities and Exchange Commission ranks cryptocurrencies as securities, while the U.S. Commodity Futures Trading Commission considers bitcoin a commodity. This confusion brings in more confusion as to which regulator will set the rules for cryptocurrencies. The confusion has created uncertainty despite the growing market capitalizations.
As if that’s not enough, the market has witnessed rollouts of many financial products that use bitcoin as a fundamental asset, for example, futures, exchange-traded funds (ETFs), and other derivatives.
How do people see the current prices of cryptocurrency?
Now that we have seen the factors that determine the current prices of this investment, it’s time to look at where you can get information about different coins and how they are doing in the market.
Several sites display live updates of different coins, their demand, and supply. These sites include
Where can people learn about the value of particular bitcoins?
There is not a day that goes by without bitcoin making headlines. Only a few in the business understand all the details and figures the display.
How would more people learn about bitcoins and how to trade? There are many websites teaching people the basics of these currencies and how to trade.
This information is critical because it is seen by many as the future of finance, and it could have such a significant impact on the money you carry around in your pocket. Therefore, it is advisable to get acquainted with this upcoming and fast-growing business that the elite are joining each day.
Some of the websites have prepared a lot of information that you can access on the following pages.
Bitcoin is here to stay, and it’s set to be a long-term fixture for the finance market. The debate keeps growing every day. You can take part in it to learn more and educate yourself if you are interested in joining the call.
Conclusion
When it comes to bitcoin trading strategy, you should learn as much as possible before jumping into the trade. The market can be dangerous if you do not understand how this kind of market works.
There are enough resources to learn how to put in your money and how to get it. However, Bitcoin is a highly high-risk asset that even the most experienced traders know they can lose money in a highly unpredictable way. It is a volatile market that has no mercy for any trader or investor.
Therefore, it is imperative to learn all you can before you get into it—all the best in your research and learning.
