Bitcoin is a digital currency that is extensively used as a medium of exchange from person-to-person. After its invention, people were not so impressed, and therefore no one invested in bitcoins. People used to buy commodities with bitcoins, and a person even bought pizzas with bitcoin. With the passage of people, bitcoin advocates understood the underlying technology on which the bitcoin system works. The blockchain technology is a distributed public ledger that recorded all the transactions and secured the transactions from fraud.
The topic of bitcoin’s value has always remained controversial. The cost of every currency is determined by several factors that include scarcity, durability, transportability, and more. In recent years, bitcoin has gained massive popularity because of its amazing features. The various factors that determine the price of bitcoin are competing cryptocurrencies, mining processes, regulations over its sale and demand, and international prices.
The implausible evocative demand drives the triumph of currencies’ development. Exchanging cryptocurrencies are constantly increasing in all parts of the world. Trading of cryptocurrencies can be learned from a Bit Signal. Trading can help you earn a lot of money, but you must learn how to understand the market of bitcoin and other cryptocurrencies.
What are the factors that manipulate the price of bitcoin?
Regulations on cryptocurrencies
The one main factor that manipulates the price of bitcoin is regulations on cryptocurrency. Unlike fiat currencies, the cryptocurrency industry has seen swift acceleration, and government bodies have also been attracted to this industry. Because bitcoin is a decentralized currency, it is not regulated by the government. This has led to the use of bitcoins in numerous illegal and criminal activities like terrorism financing, money laundering, and more.
This has caused a ban on bitcoin in many countries, and there are restrictions on trading bitcoin. Some countries consider bitcoin illegal, which leads to fluctuation in the price of bitcoins.
Adoption of currency
Another factor that influences the price is the adoption of bitcoin. The increased popularity of bitcoin leads to increased costs, and if the demand or popularity is low, the price decreases. In today’s time, the popularity has increased at a high rate that institutional investors, multinational corporations, and governments have started accepting it. This has lead to an increase in the price of the currency.
From the year 2012 to 2018, the reports have recorded an increased number of bitcoin addresses that estimate the number of bitcoins in circulation. In the years 2013-2015, bitcoin price was less due to which the difficulty of bitcoin mining decreased. In the years 2016 and 2017, the cost of Bitcoin raised and the mining process becomes difficult and challenging, which lead to less growth of bitcoin. According to bitcoin demand, the difficulty of mining changes.
Halving bitcoin reward
Unlike fiat currency, whose supply is unlimited and can be generated at the time of need, bitcoin supply is fixed, and halving bitcoin reward manipulates its price. There are 21 million bitcoins mined, and the miners are rewarded for verifying 1 MB of transactions that constitute a block. The rewarding price decreases after every four years since it was introduced. When bitcoins were introduced, the reward was 50 bitcoins, and in today’s time, it has halved to 12.5 bitcoins.
The halving bitcoin reward has a major impact on the mining process. Now the miners are not motivated with mining reward, and thus the hash rate has been decreased. This has late to change in the price of bitcoin has impacted the bitcoin industry.
The Future of Bitcoin
The bitcoin market is highly volatile, but still, it has gained massive popularity in recent years. It is impossible to predict the price of bitcoin and other cryptocurrencies but still, the developers and bitcoin advocates ensure that it will be the wave of the future. People expect the bitcoin market to be stable and provide businesses and companies’ possible opportunities.
The world of cryptocurrencies is full of opportunities, and investing in bitcoin can make you earn huge. The popularity of bitcoin depends on some factors that are mentioned above. You must gain deep knowledge of these factors and understand how they influence the price of bitcoin.