Bitcoins are rare, and they are also useful to the buyer, thus valuable. This value is determined by the market’s price, which is dictated by the supply and demand variables. The maximum of Bitcoins is capped at 21 million, making them very desirable because they are limited. Bitcoins are divisible, transferable and fungible (standardised), making them useful.
How are Bitcoin prices determined?
Nevertheless, the value does not always reflect in the price. Instead, the leading indicators that define the worth are the supply and demand variables on the exchange. In this regard, the Bitcoin is not different from any other commodity or currency offered on the market. As we mentioned above, the price of the Bitcoin will be mostly determined by the price people are willing to pay for it.
The prices change as the factors of the market change. Moreover, Bitcoin is not traded on one particular exchange, but many different virtual exchanges, which have their average prices listed as part of the trading commodities.
Liquidity is also an issue when it comes to any cryptocurrency, not only Bitcoins, since the amount is not always the same, and it goes up and down according to the price. The rate of fiat currencies is an equally important factor.
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