Price of bitcoin is directly or indirectly controlled by you, me and all of the bitcoiners! In simple, it is maintained by the supply and demand of price. May 08, · Bitcoin is a Network At this point in time, the network effect is driving the price of bitcoins more than anything else. As people join the network, the price increases. May 22, · Therefore, the entire Bitcoin community controls the price, at least in theory. The more BTC that any individual holds, the more influence they have on the price.
What controls the price of bitcoinexchange rate - who controls the price of BTC? - Bitcoin Stack Exchange
Consequently, there are no corporate balance sheets or Form Ks to review. Contrarily, bitcoin prices are influenced by the following factors:. Countries without fixed foreign exchange rates can partially control how much of their currency circulates by adjusting the discount rate, changing reserve requirements, or engaging in open-market operations.
The supply of bitcoin is impacted in two different ways. First, the bitcoin protocol allows new bitcoins to be created at a fixed rate. New bitcoins are introduced into the market when miners process blocks of transactions and the rate at which new coins are introduced is designed to slow over time. Case in point: growth has slowed from 6.
The slowing of bitcoin circulation growth is due to the halving of block rewards offered to bitcoin miners and can be thought of as artificial inflation for the cryptocurrency ecosystem. Secondly, supply may also be impacted by the number of bitcoins the system allows to exist. This number is capped at 21 million, where once this number is reached, mining activities will no longer create new bitcoins.
For example. Once 21 million bitcoins are in circulation, prices depend on whether it is considered practical readily usable in transactions , legal, and in demand, which is determined by the popularity of other cryptocurrencies.
The artificial inflation mechanism of the halving of block rewards will no longer have an impact on the price of the cryptocurrency. However, at the current rate of adjustment of block rewards, the last bitcoin is not set to be mined until the year or so. While bitcoin may be the most well-known cryptocurrency, there are hundreds of other tokens vying for user attention. The crowded field is good news for investors because the widespread competition keeps prices down.
Fortunately for bitcoin, its high visibility gives it an edge over its competitors. While bitcoins are virtual, they are nonetheless produced products and incur a real cost of production - with electricity consumption being the most important factor by far. Bitcoin 'mining' as it is called, relies on a complicated cryptographic math problem that miners all compete to solve - the first one to do so is rewarded with a block of newly minted bitcoins and any transaction fees that have been accumulated since the last block was found.
What is unique about bitcoin production is that unlike other produced goods, bitcoin's algorithm only allows for one block of bitcoins to be found, on average, once every ten minutes.
That means the more producers miners that join in the competition for solving the math problem only have the effect of making that problem more difficult - and thus more expensive - to solve in order to preserve that ten-minute interval. Research has shown that indeed bitcoin's market price is closely related to its marginal cost of production.
The more popular an exchange becomes, the easier it may draw in additional participants, to create a network effect. Given that all of this data is digitally available and the arbitrage is highly automizable, market makers use trade bots to close arbitrage opportunities in moments. In other words, markets converge in price because it is profitable for market makers to facilitate price convergence.
Sign up to join this community. The best answers are voted up and rise to the top. Asked 1 year, 4 months ago. Active 1 year, 3 months ago. Viewed times. Maxwell 6, 2 2 gold badges 12 12 silver badges 43 43 bronze badges. This is not a place for conspiracy theories. The price you see is simply the last price any two people anywhere choose to trade at. There are bots involved written by people who have various strategies, but ultimately the choice to trade and at what price is made by those whose money it is.
There is nothing more to it. They get published by exchanges. Of course people are free to trade outside of exchanges, and their price is not known to the world. The vast majority of trading happens in open markets, however. They are an imposition of the planners will on those of market participants and restrict voluntary trade. Enforcing price controls also requires a substantial attack on privacy and an increase of surveillance. Navigation menu Personal tools Create account Log in. Namespaces Page Discussion.
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