Cryptos Land: Factors that determine Bitcoin's price

Wednesday, 29 November 2017

Factors that determine Bitcoin's price

Bitcoin's price this year have experienced a exponential growth resulting in breaking the physiological barrier at $10000 and have since exploded to a near $11000 taking the spotlight away from almost all Altcoins. Sow what drives Bitcoin's price? Well there are many factors that determine its value.

1. Speculation
The major reason for Bitcoin's price drive comes from speculation as it is the case with many traditional asset. Speculation drives Bitcoin's price more than any other reason. People tend to buy Bitcoin speculating that its price will go up and this drive Bitcoin's price even higher.

2. Supply and Demand
Bitcoin is decentralized asset with a maximum supply of only 21 Million coins this means that its supply perfectly inelastic and thus the supply side can't affect its price. So which thing does affect it? Well, it is the demand, Bitcoin's price is determined by its usage, speculation, etc. So more the demand more the price, less the demand less the price.

3. Decentralized
While supply being fixed, the decentralization adds more to its price hike. All the currencies in the world are centralized except Bitcoin. Bitcoin can not be printed by a single entity or its supply can be controlled by an Organization it is an open source currency available to all. Just think of a mining rig in your house printing your own Bitcoin. Yes every individual can be a bank in Bitcoin.

4. Acceptance
Bitcoin acceptance by retailers and the probability that the giant online shopping stores or Tech companies might accept it as a method of payment leads to a surge in price for Bitcoin. In Japan it is estimated that about 25000 stores accept Bitcoin as method of payment and the number is set to triple in few months.

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