This cryptocurrency came into the money market in the year of 2009. Bitcoin is a computer file that is kept in the computer or smartphone’s digital app. People can send bitcoin in other digital apps. All the transaction is recorded in the public list termed as blockchain. It is the proof of ownership of cryptocurrency. Bitcoin came to the market by an unknown person or group of people using the name Satoshi Nakamoto. Since the central bank of the country does not issue bitcoin, inflation rate, monetary policy or fiscal policy do not have any impact on the bitcoin price. Bitcoins can be converted into cash in various ways.
The factors are the determinant factors of bitcoin price:
There are some factors that make an impact on bitcoin price. These are
- The cost of production of bitcoin via the mining process
- The supply and the demand of bitcoin in the market.
- The availability of other cryptocurrencies in the market
- The governing rules and regulations for selling
- The reward is given to the miners of bitcoin for transaction verification to the blockchain.
The mining process has a restriction on producing bitcoin that is 21 million. Last year 18.587 million had been produced by the mining process.
Why the prices of bitcoin go up or down:
- The availability of bitcoin is influenced in two ways. Firstly, the bitcoin protocol permits the creation of a new bitcoin in a certain amount. When miners process a block in a transaction, a new bitcoin comes into the The rate of demand for bitcoin is more compared to the growth of bitcoin introduction at a snail pace. For this, the price goes up and the second reason is that since the bitcoin supply is restricted to 21 million, after reaching that point, the mining process is not going to create any more bitcoin, for this demand continues to increase, the price goes up.
- Many people like to invest in bitcoin and find it as a desirable way of payment. Because it is available easily via various ways of exchange. The purchasers do not need to own it fully and the availability of pieces of shares is available there. All of these make bitcoin attractive and the cause of the hike in price.
- The fluctuation in the prices of bitcoin for cryptocurrency trading can cause many Like coverage of media, speculation, the supply of bitcoin. Afraid of negativity, people prefer to sell their shares, as a consequence, the price decreases. Many people nowadays lose hope in the fiat currency and they like to store their money in the form of bitcoin as they find it as a good alternative for not being regulated by a central authority. For this reason, the price increases.