Bitcoin is one of the most popular cryptocurrencies on the market, it is a decentralized system, so there is no government or company to regulate it. You can exchange Bitcoin or other cryptocurrencies for real cash at different values. Various tools can help you understand the market exchange rates. You can easily find a bitcoin converter to convert bitcoins to other currencies.
Bitcoin functions as a financial system created by a programmer “Satoshi Nakamoto “in 2009. This cryptocurrency allows electronic exchanges and the buying and selling of any product or service, but have you ever wondered what determines the price of 1 Bitcoin? In this post, we will tell you.
What is Bitcoin?
Bitcoin is a type of cryptocurrency or digital currency that functions as a medium of exchange and is used as a store of value by its promoters. The BTC does not physically exist, nor is it controlled by any country; it is virtual money with a constantly changing price.
What determines the price of 1 Bitcoin?
The first price of a bitcoin was on May 22, 2010, on a ” BitcoinTalk ” forum, where the user Jeremy Sturdivant “jercos” bought with his credit card two pizzas from another user in exchange for 10,000 bitcoins, probably at a rate exchange rate of 1 BTC = $ 0.003.
You must know that the value of Bitcoin has varied over the years; this cryptocurrency experiences many increases. Also, in 2017, it reached its all-time high of almost $ 20,000. However, to answer your concern about what determines the price value of 1 Bitcoin, here are the key reasons:
Supply and Demand
The value of Bitcoin is determined by supply and demand, which means that the price of BTC is determined by everyone who participates in the trading process and can also be influenced by other factors. However, you need to know that since there is more than one platform in the world to trade, there will be no one world price or one single price for bitcoin, a situation that also supports this answer.
Transparency in the Process
The blockchain is critical to the transparency of the Bitcoin transaction, thanks to its decentralized nature and its ability to record all types of transactions (publicly owned ledgers, bank transfers). This ensures integrity, prevents data manipulation, and increases security thanks to the cryptographic nature of BTC.
In this process, it is the miners who are in charge of validating transactions and checking that the new information matches the previous transaction. Furthermore, even if users are not identifiable, their pseudo-anonymous nature allows transactions to be tracked.
BTC Miners or Producers
The Bitcoin network is responsible for creating and distributing a random amount of coins, approximately 6 times per hour to customers who are active in the network or who contribute through their own computing power to manage the network’s security.
In this case, generating BTC is known as mining (analogous to gold mining); Thus, the likelihood of a user acquiring the Bitcoin reward depends on the computing power included in the network and the competition with other peers or inferior networks.
Bitcoin miners or producers can propose the selling price of their assets and engage in a bargaining process to reach an agreement with buyers. Such deals are common on online trading platforms, where deals are made instantly without intermediaries and in real time.
You can’t even buy pieces of BTC on the trading markets. You don’t need to buy a whole one. Keep in mind that one bitcoin is made up of 100 million “cents” (satoshi). In this case, if a Bitcoin is worth 1000 euros, you can only buy 1 dollar and not its full value.
Fluctuation of BTC
The value of a bitcoin fluctuates every second, i.e., its price changes every second, just like the value of other assets on the Forex market. For this reason, many people take advantage of this price difference to buy at a lower price and sell at a higher price.
The Volatility of the BTC
Bitcoin is a highly volatile cryptocurrency; its price goes up or down. Currently, the value of Bitcoin is determined in terms of the exchange rate with other currencies around the world.
Now that you know what determines the price of 1 Bitcoin, you should not hesitate to venture into crypto trading.