What determines the price of bitcoins?

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It is a fact that the price of bitcoins is volatile in nature and it will change frequently. But what makes it to change its price is still unknown to many bitcoin users. This article will help you to understand this aspect and so you can have a clear mind about it. Unlike the growth of economy, rate of inflation and monetary policy which can influence the normal currency value, the value of bitcoins are not determined by these factors. But it is relied on a few new factors and they are as follows:

  • Supply and Demand – Its supply among people who are using it and its demand in the market
  • Cost of mining process which creates bitcoins.
  • Competition – Based on the price of other crypto currencies in the market or people using it.
  • Availability on Currency Exchanges – Depends on the exchanges or trades which bitcoin trades on.
  • Stability – The regulations that are governing the sale of these cryptocurrencies. Since it does not have any central authority, the price is relied on its developers.

Bitcoin

Simply we can say, when more people wish to buy bitcoins, then its price will have a raise and if it is sold by many in the market, then its price gradually decreases. And also it does not depend on the price of traditional currency of a nation, since it is an international currency. Though bitcoin price usually fluctuates, it has been showing rise in its price for many years.