What's up CryptoPeeps? It's your girl
Maria here to deliver your daily dose of Bitcoin news. Have you ever wondered what determines the value of bitcoin? Well, wonder no more! I'm going to explain to you some of the factors that affect the price of
bitcoin and why the price changes. The supply and demand of Bitcoin plays a big factor in the prices. Currently, there is supposedly a cap of 21 million bitcoins. When that cap is reached, Bitcoin mining will no longer create new bitcoins. The supply of Bitcoin has reached 16.8 million in January of 2017. Meaning that around 80 percent of the
total amount of Bitcoin have already been mined and made available to the
public. As we all know in general economics, the price goes up when the demand cannot keep up with the supply. Number two: availability on exchanges. Platforms such as Paxful allow investors to buy and sell Bitcoin through connecting buyers and sellers in their in-house marketplace.
Networks are created through these kinds of marketplaces as the exchanges become more popular. This is
because it becomes easier to gain more participants. The price is affected by
this, as it has a direct effect on the popularity of bitcoin as more people
buy and sell. By general rule, the more popular Bitcoin becomes, the higher the demand. And as we said earlier, there is a finite amount of bitcoin. So the supply stays the same, while the demand grows higher. Number three: competition Although it is believed that bitcoin is the most popular cryptocurrency, there are over
1,000 cryptocurrencies in circulation. Examples of other cryptocurrencies are
Litecoin and Ethereum. The presence of competition keeps the value of an investment in check. For example, the value of the US dollar would have been different if stronger currencies didn't exist such as the Euro, the Yen, or the Pound. Number four: its own internal governance Since bitcoin is not regulated by a single authority, miners are put on the spot the process transactions and secure the blockchain.
If they wanted to tweak or change the software, then it has to be the decision of the consensus. Because of
this, members of the Bitcoin community feel that solving fundamental issues can
sometimes take too long, particularly the issue of scalability. At this moment, the Bitcoin software is only able to process about 3 transactions per second, which
is incredibly slow for how popular it is. As of now, the community is trying to
figure out ways to speed up the number of transactions. Sometimes, when these changes are applied, they turn into a whole other cryptocurrency. Examples of this are Bitcoin Cash and Bitcoin Gold Investors then sometimes decide
that the new currency isn't as valuable, resulting in the new currencies not
having enough value as bitcoin.
And that's all we have for today! I hope you all learned something new! Tune in to the next episode, where we'll dive deeper into the world of bitcoin. Once more, this is Maria and I'll see you guys next time on WeTheCryptos!.