How is the Bitcoin price determined?
Bitcoin price factors that dictate the value of the cryptocurrency on the market include the following:
- Supply and demand (interest) - The controlled supply of Bitcoins is proportionate to the increase in demand. The intensified interest from institutional investors and Asia are just contributing factors to the rise in price. In economic theory, if the request for the commodity is higher then the supply of it on the market, the value of that commodity will increase.
- Government regulations - Since the beginning of 2018, countries intensively started drafting laws and guidelines regarding the legal parameters of the cryptocurrency market.
- Media coverage (mainstream popularity) - The massive success of the Bitcoin in the finance world and its unseen decentralised nature, has turned it into a mainstream attraction all over the globe. The media coverage of the profits made in this new industry that is redefining economic rules puffed up the Bitcoin price even more.
- The volatility of the market - Traders understand the primary rule of the exchange — that a more prominent risk means higher profit.
- New technology - The Blockchain is revolutionary in more aspects than one, although its first use was tied to the cryptocurrency. Today, the Blockchain technology is probably the most significant part of the creation of the Bitcoin.
Of course, there are additional external factors that affect the Bitcoin price on the market supplementary to the ones we included above. Some of them are the increasing number of entrepreneurs and businesses that started accepting Bitcoins, and the nature of the trading industry itself. Several of these influences are not even determined yet, as you can conclude from the volatility of the cryptocurrency market.
How does a Bitcoin exchange work?
The Bitcoin exchange is not that different from the traditional exchanges concept, meaning it bonds buyers and sellers and helps them conduct transactions according to previously set rules. What is different, though, are the liberal regulations and the nature of cryptocurrency, so the Bitcoin exchanges will allow you to open an account and deposit funds to buy Bitcoins, just as long as you are compliant with their policy.
A note of importance — you have to obtain a crypto wallet if you want to trade on virtual cryptocurrency platforms.
You cannot buy them if you do not have a place to keep them. The main function of a Bitcoin wallet is the same as your regular wallet or bank account. You are storing your Bitcoins in your personal digital space. If you want to know more about this subject, we have a whole chapter dedicated to it, but for now, let’s keep it short and sweet.
They are designed of two compartments: a public address and a private key. The names are explanatory, and you share the address, but never the key. When you provide people with the public address, they can send you Bitcoins; to access them, you need the private key.
Some of the Bitcoin wallets have a special feature, which allows you to buy Bitcoins through them. However, some do not, so you can keep that in mind when you decide on which one you want to use.
There are a few main differences between Bitcoin wallets, from storing on your hard drive to online storing to removable storage devices. We want to draw your attention to the Multisig wallets, which add an extra layer of safety on your Bitcoins. You would need more than one key (or signature) to gain access.
Bitcoin exchange rate
The Bitcoin exchange rate shows you the Bitcoin price on the virtual trading platform vis-à-vis other fiat currencies. The cryptocurrency market is unpredictable if you perceive it from an exchange rate point of view, but it has to be noted that, since 2013, the rate has been proliferating.
The harshest critic regarding the Bitcoin is that it creates a bubble, which makes it a dicey investment. However, what has been shown so far is that the global economy as a whole is precarious, and the Bitcoin might even turn out to be a safer investment than other fiat currencies that are available on the market.
The Bitcoin price today
The Bitcoin price today in 2018 is still fluctuating. As of the writing of this article, the price of the Bitcoin was set at USD 8,666 or AUD 11,267, with 16,990,550 Bitcoins in circulation and $147,251,829,780 USD market cap.
Bitcoin prices are subjected to changes daily.
How to buy Bitcoin
You can buy Bitcoin on a verified virtual exchange from other sellers or from the platform itself. The Bitcoin price has an fickle nature, but it is an unwritten rule that you can buy Bitcoins for a smaller amount from other traders. Now, when you know the basic principles of how the Bitcoin is priced, you are ready to get into cryptocurrency trading.