bitcoin price calculation featured image on blogpost

The Bitcoin price is not calculated, published or controlled by a central bank. This is in contrast to FIAT money, where banks use tools such as interests rates to control the value of money. So where do the media and google get the bitcoin price from? From each other is the simple answer. There is no global price for bitcoin. At best you can get an estimate of the bitcoin value in a particular set of circumstances at a particular time.

For this reason, there is a lot of money to be made in crypto arbitrage. Some people can buy bitcoin cheaper than others. Some people are prepared to pay more for bitcoin than others.

 

How Does it Work?

In 2009, Satoshi Nakamoto created a set of specifications that resulted in the birth of the Cryptocurrency we now know as Bitcoin. Each Bitcoin unit’s transactions are logged in a blockchain, this blockchain is also used to determine the current owner of each unit of Bitcoin. Bitcoin miners process these transactions using specialized computers.

These computers process a multitude of blockchains in return for bitcoins or transaction fees as a reward. The Price of Bitcoin is determined by looking at the supply and demand for a unit. Users are determining the value of Bitcoin by using it around the World. This is also called bitcoin price discovery.

In other words, one of Bitcoin’s main factors in determining its value is its scarcity and its high demand. Bitcoin is very transparent about the scarcity of its cryptocurrency. A limit of 21 million Bitcoins can be in circulation at one time. Once 21 million units are in circulation, no more will be produced. In spite of that, there are over 17.2 Million Bitcoins in circulation already. All bitcoins are worth the same value and bitcoins are divisible. This allows you to send and receive a small fraction of a Bitcoin.

The bitcoin price, however, is simply how much you can actually sell a bitcoin for. It is never the same as what you see advertised. Most Bitcoin Price Calculators and stock tickers use aggregate guestimates. Below is such a Bitcoin Price Calculator. You can use it to get a value from Bitcoin in Rand, Dollar, Pound and many other currencies. It also works for altcoins.

 

Bitcoin Price Converter

 

 

Why the High Demand for Bitcoins?

Bitcoin is a decentralized currency. Using peer-to-peer networking, the Bitcoin protocol doesn’t depend on a centralized server in order for it to exist. For this reason, this is a crucial aspect of bitcoin as it means Bitcoins continued usage is not subject to any external authority’s approval, action or opinion.

As a new level of anonymity comes along with bitcoin, people often wonder whether or not bitcoin is legal. To date Bitcoin has proven to be an insurance and speculation tool. A wealth creation mechanism.

“Real” Money vs Bitcoin

As Bitcoin is a cryptocurrency, it exists almost entirely digitally. No physical cash.

But is there that much of a difference?

  • Did you know that about 90% of all U.S dollars are purely indefinite? They literally do not exist in any physical form. A Bank generates most of its money by charging interest on loans to their customers. In other words, if a bank has $10 billion in total, only $1 billion worth of that money will exist in physical form.

In May of 2012, James Surowiecki wrote an article reporting that “only about 10% of the money supply in the U.S (about $1.5 trillion of the ~%10 trillion total) exists in the form of physical paper cash and coins.

What is The Price of Bitcoin?

As of writing this article, the price of bitcoin is currently worth $6,293 USD for 1 unit.

As this is a fairly new currency, it is extremely volatile. The price of bitcoin is subject to change daily. With this in mind, before you invest your money, make sure you’ve done enough research into bitcoin and other cryptocurrencies.

At the end of 2017, the price of Bitcoin hit a high of $19,2k for a single bitcoin whereas it started at around $870 for one bitcoin at the beginning of 2017.

During 2018/19 the bitcoin price dropped to around $3000 and in late 2021 was trading at $65k.

 

The Bitcoin Price Right Now is:

 

bitcoin
bitcoin

Bitcoin (BTC)

Price
$ 63,107.91

 

How Do Bitcoin Miners Affect the Bitcoin Price?

Bitcoin mining is essentially the backbone of Bitcoin. In particular, this is because miners provide security and confirm Bitcoin transactions. Without miners, the bitcoin network would constantly be under attack and highly dysfunctional. Coupled with specialized computer systems, Bitcoin miners use these computers to solve computational maths problems in order to add new transactions to the large distributed public ledger commonly known as the “Blockchain”.

There are many different aspects of this cryptocurrency that add to its benefits, changing the price of bitcoin in tandem. Many features of Bitcoin outweigh traditional paper money and the incumbent systems that come with it.

Bitcoin Price Calculation Summary

With this in mind, Bitcoin’s key function of being a storage, accounting, and payment network is evident as countless users are regularly purchasing Bitcoins, transacting with bitcoins and using its networked ledger. These are the “decision makers” when it comes to the price of bitcoin.

The simple truth is that the bitcoin price is whatever someone will pay or whatever someone will sell a bitcoin for. What is important is not the price, but the parameters which influence the price. As long as the demand to hold bitcoin is stable or increases the FIAT value of Bitcoin will increase. This is due to its inflationary nature.

 

Did you know that Bitcoin is the only currency with real price discovery? Leave your comments below.

***This article is intended to educate and should in no way be seen as investment advice or an enticement to use any specific platform or service. Cryptocurrency markets are highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Crypto trading is not a regulated industry in most jurisdictions, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.***

The Bitcoin logo is an iconic symbol that represents the world’s first decentralized digital currency.  It has become an instantly recognizable symbol for millions of people around the world who are interested in this revolutionary technology.  The Bitcoin logo is more than just a slanted B with two lines through it. It is a symbol […]

best crypto tax software article featured image

Crypto tax software: the unsung hero of the cryptocurrency world. With countless choices available, navigating the sea of options can be daunting. But have no fear, friend! When searching for the perfect crypto tax software, consider factors like reputation, features, exchange integration, pricing, customer support, and security.  Doing your homework pays off – it’s worth […]