Factors Influencing The Price Of Bitcoin

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2. Factors Influencing The Price Of Bitcoin www.cryptoknowmics.com

3. 2 You might be knowing all about Bitcoin, but ever thought about the factors that determine the price of Bitcoin. If not, then today, we will let you know it. By asking any cryptocurrency advisors, they will make you understand how Bitcoin is much different from buying a bond or stock. www.cryptoknowmics.com

4. 3 ● Other than investment in traditional currencies, it is not the case with Bitcoin, as it is a decentralized currency which eliminates the role of a central authority like a bank or government. ● So now it gives a clear understanding that no inflation rates or monetary policy apply to Bitcoin. Instead, the price of Bitcoin is determined by other factors. www.cryptoknowmics.com

5. 4 Factors Influencing Price Of Bitcoin ● The factors which influence the price of Bitcoin are: ● Competition with rival cryptocurrencies ● Rewards being issued to miners ● Influence on the supply of Bitcoin ● Sales being governed by regulations www.cryptoknowmics.com

6. 5 Competition With Rival Cryptocurrencies No doubt, Bitcoin is the most popular and well-known cryptocurrency, but that doesn’t mean, it is free from competition from other rival cryptocurrencies. Even though it is still a dominant digital currency in market capitalization, still there are altcoins like Litecoin, Ether, EOS, XRP and Bitcoin Cash that have become its closest tough contenders by the year 2020. www.cryptoknowmics.com

7. 6 Rewards being issued to miners Bitcoins are virtual currencies and are produced products incurring real production cost. So far, electricity consumption is known to be its major factor. Bitcoin mining depends on a complex crypto mathematical problem, which is solved by the miners. The first one to find gets rewarded with a block of new-minted Bitcoins. www.cryptoknowmics.com

8. 15 Influence on the supply of Bitcoin ● It is one of the reasons which influences the price of Bitcoin. Two ways which influence Bitcoin supply. Firstly, the fixed rate of newly created Bitcoins allowed by the Bitcoin protocol. ● The introduction of new Bitcoin in the market happens when the miners process the blocks of transactions. Also, the rate during the introduction of the new coins gets slow by time. Secondly, due to the existing number of Bitcoins allowed by the cryptocurrency eco-system does impact the supply. www.cryptoknowmics.com

9. 15 Sales being governed by regulations ● Since Bitcoin does not allow any interference of central authority, so it is completely depended on miners and developers for the processing of transactions and safety of blockchain network. ● It is because it takes too much time to resolve fundamental issues. Thus the community is divided for the betterment to increase the transactions. ● Now these forks are divided into two types, Soft forks and hard forks. The difference between these forks is that soft forms do not lead to any changes in the creation of new cryptocurrency, whereas hard forks are the opposite of the former. www.cryptoknowmics.com

10. 15 Conclusion As you can see in the current year 2020, many of the altcoins, including Ether, Litecoin, Bitcoin Cash, XRP and EOS have become its closest competitors. So this can be one of the major factors that influence the price of Bitcoin. Following other factors are the influence of supply, rewards given to miners and the sales being governed by the regulations. Sources https://www.cryptoknowmics.com/crypto-advisors www.cryptoknowmics.com

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