Cryptocurrencies are not something new, far from it. Bitcoin began its adventures in 2008, although it has not been until relatively recently when interest in cryptocurrency as an investment asset has skyrocketed. And, with this, following their value has become a kind of obsession for many.
Supply, demand… what determines the price of bitcoin?
The first thing we should know is that the value of Bitcoin that can be consulted on websites like Binance is calculated in relation to other current currencies, such as dollars or euros. In this way we can say that “one Bitcoin today is equivalent to 25,000 euros”, in order to get an idea of its value. But what is it that determines its value?
As usually happens with all goods or assets, the price of Bitcoin marks it supply and demand. And it is that there is only a limited number of Bitcoin (21 million), of which around 19 million are already in circulation (the remaining two must still be calculated, or “mined”, by solving complex mathematical problems). Therefore, when there are more users interested in buying than selling, the price rises; and when it is the other way around, and more people want to sell to obtain liquidity, the price falls.
In addition, the price can go up and down due to other factors, just like the rest of the market works. One of the most affected is the coin adoption. If we can’t use Bitcoin anywhere, it will be worth little. But more and more platforms (and even stores) are allowed to pay with these currencies, which is why they arouse greater interest for users. The accessibility It is another of the key factors of this currency, since while a few years ago it was difficult to buy and use it, thanks to exchanges, such as Binance, anyone can easily buy all kinds of cryptocurrencies using only our credit card.
Finally, technology and availability also play a role. The fewer Bitcoins there are to generate, the more complicated (and expensive) it is to calculate them, so the price does not stop rising. And, being a limited coin, and very close to the top, the price will continue to increase.
Blockchain, the heart of Bitcoin
To understand how Bitcoin works, it is also necessary to know another key element: the Blockchain. Broadly speaking, this could be understood as a decentralized and distributed database where all transactions carried out with cryptocurrencies are recorded. This blockchain is not only used for Bitcoin, but also for other alternative cryptos (called altcoins), such as Ethereum, and even to keep the well-known “stablecoins” in operation, cryptocurrencies that maintain a value of 1 stablecoin = 1 dollarand their price does not usually change over time.
Thanks to this technology it is possible to guarantee the security and transparency of all transactions that are carried out with these cryptocurrencies. For example, in the case of Bitcoin, each BTC transaction is recorded in this database and, furthermore, it is validated by a distributed network of users, the so-called “miners”. Thanks to them, it is verified that the transaction is valid and, once verified, it is added to the chain of blocks.
For all these reasons, the blockchain is a key technology in the proper functioning of cryptocurrencies such as Bitcoin. All the transactions that are carried out are registered in it, which shields the security and transparency of all the money that moves through it. And, being decentralized, it prevents it from being manipulated or altered.
