Bitcoin has been around since 2009 and has been the leading cryptocurrency for most of that time. This digital currency is completely decentralized which means that it is not regulated by any bank or organization. The basic concept with Bitcoin is that it can’t be affected by any third party forces or political interests, which makes it completely unique compared to all other world currencies.
On this page, we will discuss more about the Bitcoin exchange rate and how it and other digital currencies get their value. If you are interested in reading about Bitcoin in general, who created it, etc. we recommend that you start by reading this general bitcoin article first.
Traditional Exchange Rates vs. Bitcoin Exchange Rate
All physical currencies in the world have an exchange rate that is either based on the market or the price of a commodity. A currency whose price is based on the market is called a floating currency and a currency based on another price is a fixed currency. Floating currencies are also called fiat money and fixed currencies are called gold standard (or silver standard, etc.).
Bitcoin is particularly unique because it has neither a floating or a fixed exchange rate. Instead, the value of Bitcoin is based on its demand. This means that when the interest for Bitcoin is high the price surges, and when the interest is low the Bitcoin price sinks. If the demand for Bitcoin would stop the currency would cease to exist.
The risk of a collapse is the factor that most experts are worried about. No other currency in the world could disappear as quickly as Bitcoin and other digital currencies. Therefore, many experts are still recommending against the use of Bitcoin.
Factors influencing the Bitcoin price
Bitcoin exploded late 2017 and reached almost $20,000, within a time span of a few months the bitcoin price exploded and shortly after it dropped drastically in value. Why? the absolute biggest factor is popularity. Supply and demand. Let’s look at a few factors that affect the bitcoin price:
How popular Bitcoin is – If Bitcoins were unwanted the bitcoin price would sink like a stone in water. If no one wants Bitcoin the value goes away instantly.
- Bitcoin mining – Bitcoin mining influences the price a lot as well, how much can be mined? How hard is it to mine? what are the costs associated with mining?
- Regulation – Many countries are trying to control bitcoin with different regulations. If bitcoin, for example, becomes banned in a big country, the bitcoin price will take a big hit.
- Media – Again, this is really the first point. Popularity. Media controls the masses views on many things bitcoin included.
- Technological factors – Let’s say that tomorrow a new payment system is introduced that lets every grocery store in the world use bitcoin. This will affect the Bitcoin price because it makes bitcoin a whole lot more usable and so we see an increase in popularity.
How New Bitcoins Are Created
You first need to know the basics of how Bitcoin is created in order for you to fully understand the Bitcoin price and what affects it. A regular currency is printed and regulated by the country’s (or currency union’s) central bank. Their job is to keep the exchange rate and inflation stable. That is how it has been for hundreds of years. However, the way Bitcoin is created is totally different, partly because it is unregulated but also because Bitcoin doesn’t exist in a physical shape or form.
Bitcoin is created through a process called (virtual) mining using a hardware whose sole purpose is to solve mathematical equations in exchange for Bitcoins. Another difference between digital currencies and regular currencies is that the digital ones always have a limit on how many coins can be created. Bitcoin’s limit won’t be reached until 2140. After that, its value will shift from mining to transaction fees.
Bitcoin Price Chart
To check how much one currency costs in another currency you need to use currency converter. The same thing goes for Bitcoin. In other words, you can use a currency converter to answer the question: How much is 1 Bitcoin worth? However, the interest in converting Bitcoin price to another physical currency is not as big as for most other currencies, and therefore the conversion process is slightly different.
Due to this unique situation, most people are happy just to know the value of Bitcoins in dollars. In order to meet this demand, we have created a Bitcoin chart where the price for Bitcoin in USD is shown and updated in real time. You can find the Bitcoin price chart on this page for reference.
Note that our Bitcoin graph offers more than just the current price. The tool can also be used to show price history and information about how the price has developed over time. This feature is mostly used by people who are interested in buying Bitcoin as an investment since the price history can be used to make an assessment of what is going to happen.
Trade Bitcoin with regulated brokers
Plus500, Markets.com, and eToro are few of the leading online brokers for the forex market and CFDs. Recently, they also introduced the opportunity to invest in cryptocurrencies on their trading platforms.
Some of the many benefits of trading Bitcoin and Ethereum at a regulated CFD broker is is all the practical features such as risk management, trading without an e-wallet, short trades, and much more. We highly recommend our readers start trading with digital currencies on CFD-brokers because of these great features. There are many other cryptocurrency exchanges out there that are really good as well but equally many bad. Always be careful when