Not to be confused with the term “value” the price of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More is simply the monetary cost of it, whereas “value” is a perceived regard for the benefits and usefulness of the cryptocurrency. BitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More price is expressed through exchange rates in relation to other currencies. As an example, the bitcoin-to-dollar exchange rate has been on average over $16,500 (Dec17) for one bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More.
According to a logarithmic release function, the amount of bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More in circulation will reach its cap of 21 million over the course of 100 years. This might seem like an exaggerated amount of years considering that almost 17 million bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More are in circulation as of this article, but it isn’t. The reason for such a big number of years is because by design, the rate at which new blocks are discovered through mining slows down drastically throughout the years as more bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More go into circulation.
As bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More is embraced by a wider audience, its demand is always on the rise. The supply of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More is always constant and as a result the demand of it is constantly increasing. Because of this, the only thing that can vary in the equation is its price, which, assuming an increase in demand will keep increasing over the years.
While bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More has many different functionalities and uses, we’re only going to be taking into consideration the ones that are relevant to its price increase and occasional decrease:
- BitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More Payment Network – bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More as a currency
- BitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More Storage and Transfer – bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More as a store of wealth and medium of value transmission
- BitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More Exchange Rate – bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More as a market instrument and commodity
Transactions done over the network don’t really have a direct effect on its market price. But, there is an indirect influence due to the high activity of the network, showing that there’s a lot of usage and demand for the currency. For a direct impact on its price, bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More have to interact with other currencies, like it does in exchanges.
BitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More transactions made through an exchange have a direct effect on its price, buying bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More via fiat currency or another cryptocurrency tends to increase the price of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More. This happens because bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More change hands – from the exchange’s wallet to the wallet of the user that purchased it. Alongside the exchange transaction is a bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More network transaction, but, only the exchange transaction has a direct influence in the exchange rate of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More.
As mentioned previously, transactions made through exchanges affect the price of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More, and in the case of selling bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More, it causes the price to go down. So, let’s give an example of how this happens:
A man working in the US, getting paid in USD, would like to send money to his family in Venezuela. Since international banks aren’t an option anymore, the person chooses to use the bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More payment network, buying bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More from an exchange that offers BTC/USD. Then, the person sends the bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More to a BitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More addressAlso referred to as a public key. An address is a string of letters and numbers corresponding to a bitcoin wallet, this is where bitcoins are sent to when a transaction is made. However, to access the bitcoins received, a private key is required, whi... More owned by a relative, and 30 or so minutes later, the relative receives these and uses a local exchange that offers BTC/BSF.
The bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More purchased in the BTC/USD exchange cause an increase in its price, even if small. 30 minutes later however, the sale of these bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More through a Venezuelan exchange causes a small decrease in the BTC/BSF rates.
This example also illustrates the effect of money flow, which causes currencies to increase at the expense of others. Additional to this, there are more routine bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More sales that have an influence on the exchange price of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More, such as:
- Merchants accepting bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More
- Miners that “cash out” to pay their bills and expenses with fiat currencies
- The redemption of transmission bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More (as explained above)
- The conversion of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More salaries into fiat currency
It’s often said that merchants convert any bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More received straight to fiat currency because of the often volatile prices of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More. This is considered a good strategy, but it’s also worth noting that different businesses go for different strategies depending on certain policies. It’s not unlikely that some businesses look for some investment advice and end up holding bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More amounts or channel them into investment funds. This proves to be a good idea too, as it has the same effect as long-term bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More storage. Keeping bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More out of circulation effectively leads to an increase in its price because the demand keeps increasing and the supply of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More is limited.
There is indeed a decrease (even if small) on the price of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More when merchants convert any bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More receipt straight to fiat currency, but this never truly affects it too much because there’s a certain balance that is caused by the consumers that purchase bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More and eventually spend them. Even if the prices of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More aren’t exactly something constant, both the merchants and the consumers balance each other’s predominant buying or selling tendency.
A big volume of the bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More transactions made on a daily basis are based on speculation, which is a remarkable thing to say the least. No speculative instrument experienced the exponential growth that bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More has, so it doesn’t come as a surprise that the speculative market has the ability to influence the price of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More.
The volume of the transactions discussed in the previous section can be considered minuscule compared to the large amount of bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More that are sold and bought on a monthly basis in the speculative market.
Buy and hold investors aren’t included here, mainly because they buy and sell infrequently. However this category does include early adopters of the coin, including Satoshi Nakamoto and most of the early bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More miners. They have considerably sized bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More holdings and because they’re founders of the bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More network, they’re entitled to profit-taking for buying houses, cars and any other sizeable purchase made that is typically only possible with fiat currency.
In this category, the main groups that have an influence over the price of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More are:
- Retail exchange traders
- Early adopters of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More that “cash out” to fiat currencies.
- Investment funds and ETFs
It’s no secret that central banks and governments are together because of shared interests, and their way to maintain control of things and staying in power is through money. Because of this, it won’t come off as a surprise that money that they cannot control becomes a problem for them.
Therefore, it’s only natural that these authorities go through extraordinary efforts to make this “threat” go away. However, not all of them go against it, some authorities actually do the opposite and embrace bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More by encompassing it in their legal framework, creating tax codes specifically for cryptocurrencies and then encouraging its use.
The mere thought of regulating bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More makes users nervous, but quite frankly it’s more beneficial than anything, since statements of the following kind tend to result in big price fluctuations:
- Statements by governments and central banks
- Parastatal bodies talking about regulation
- Incomprehensible legalese
- Any mention of taxation
Do announcements have an influence on bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More prices?
It’s debatable, but evidence suggests that users are more prone to take action because of a news article. However, the direction of the price movement tends to be unrelated to the actual article itself and is mostly determined by the social mood at the time.
To sum it up
There are plenty of things that have an influence on the price of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More, like the gradually rising supply/demand curve, or the speculative trade of thousands of bitcoinsIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More that goes on a daily basis through exchanges. However, checking the price chart of bitcoinIs the first decentralized digital currency, founded back in 2009 by a man going under the pseudonym Satoshi Nakamoto. Decentralization is one of its many features, because it means it’s not regulated by a third party like a bank or government. Add... More you can see that the average price is always on the rise, thanks to the balance in tendencies between merchants and consumers. And while some banks and governments are still against the cryptocurrency, it’s slowly being embraced by more and more institutions, meaning that price increases in the future are very likely.
