What determines the price of Bitcoin?

1 Answer(s)

What is Bitcoin?

                                                                                     

This is a digital currency in the form of P2P, a point-to-point decentralized payment system. It was proposed by Nakamoto in 2009. The total amount of Bitcoin is permanently limited to 21 million. Unlike other currencies, Bitcoin does not rely on a specific currency institution. It is generated by a large number of calculations according to a specific algorithm, and uses cryptographic design to ensure all aspects of currency circulation. Security. Bitcoin can also be used to redeem and convert to the currency of most countries. Users can use Bitcoin to buy some virtual items, such as clothes, hats, equipment, etc. in online games. As long as someone accepts it, you can use Bitcoin to buy items in your life.

Let’s take a look at the historical price changes of Bitcoin.

When Bitcoin began to appear in 2009, the initial price of Bitcoin was about $0.001, and there was not much change in the next five years. During the five years, the price fluctuation of Bitcoin was small and the growth rate was slow. Since 2013, Bitcoin has grown rapidly. Bitcoin has attracted a lot of attention because of the Cyprus banking crisis. In November 2013, the Chinese began to purchase bitcoin in large quantities, and the price rose by 1000%. However, it did not last too long. In February 2014, Bitcoin fell by 40% when Bitcoin was hit by a DDoS attack on GOX on the switch Mt server. Since May 2016, Bitcoin has won the trust of more and more people, and its price continues to rise. In June 2017, the market fell sharply and prices fell by 14%. Bitcoin is recovering its market until now.

So what is the reason for the impact on bitcoin price volatility?

1. The degree of concern

Currently, approximately 1.6 billion people own Bitcoin and more than 140,000 have Bitcoin wallets. And this number is growing rapidly, and because the number of Bitcoins is fixed, its price will continue to rise.

2. Technical issues

The underlying technology of Bitcoin is the blockchain, and because it is open source code, everyone can check it. And fix some errors and weaknesses in the code, precisely because its technology is not perfect, some hackers seized the technical loopholes and stole bitcoin, which led to the decline of bitcoin prices.

3. Global political and economic trends

In the era of globalization, a country can decide to influence the whole world. For example, some countries such as Japan and South Korea accept cryptocurrencies, and bitcoin can consume, which greatly increases the price of bitcoin. In some countries like China that strictly regulates bitcoin, this has caused the price of bitcoin to fall, so the national policy has a great influence on the price of bitcoin.

4. High volatility

Volatility is the uncertainty or risk in the value of a security. Higher volatility means that the value of securities may spread over a greater range of values, that is, the stable price of bitcoin may change in any direction in a short period of time. For example, the fluctuation of Bitcoin is now about 10%, but it is also falling.

In addition to the above four reasons, there are many factors that affect the price of Bitcoin, but what I have listed is crucial.

Answered on July 6, 2018.
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