It’s going to be a long post, and I implore you to read to the end if you really want to learn how Bitcoin price is determined, the value of 1 bitcoin, and how it was created in the first place.
Have you ever wondered how much exactly 1 Bitcoin costs? Have you bothered to ask yourself how bitcoin was created? Sure, you can basically Google the name of the cryptocurrency and get the answer right away, but do you know how that value is determined?
The value of bitcoin is determined by a number of different features which, frankly, can be confusing for the average internet user. After all, cryptocurrency is relatively new to the economic space, and it has only been taking its cultural and economic place for a few years now.
How Bitcoin was created?
The idea of a decentralized financial currency has been around for decades, but it was after the 2008 financial crisis that an anonymous user known only as “Satoshi Nakamoto” designed what would be the first model of Bitcoin.
The currency, which is 100% digital, emerged as an alternative to conventional paper currency and is not controlled by any type of banking institution or government. Currently, it is used in digital transactions and in several establishments around the world, with its access having expanded rapidly in the last decade.
After the 2008 financial crisis discredited many banks and financial institutions in the eyes of ordinary people, Satoshi found the perfect time to start an exodus against the traditional way of carrying out transactions and introduced Bitcoin to the world. American banks almost completely failed in 2008, and this only happened because the US government sent about US$ 3 trillion to help with the fall.
The first Bitcoin transaction was carried out in 2009 when Satoshi Nakamoto decided to send 10 bitcoins to Hal Finney, but it was not until 2010 that a man named Laszlo Hanyecz bought two pizzas for 10,000 BTC, which at the time was worth around 25 US dollars, and initiated what would be a new step towards change in the world economy.
At that time, Bitcoin only existed to go against the policies of banks and governments that were going through moments of crisis and world inflation. For Satoshi and his followers, bitcoin would be the financial alternative for those who did not believe in the economic success of the current paper money printing format demonstrated by several governments, especially the US government.
To ensure the success and legitimacy of the currency, Blockchain was created and has become the main source of security for bitcoin.
What is blockchain and how does it work?
Bitcoin uses Blockchain, which is a kind of open ledger that receives, informs, and generates confirmation of all transactions carried out with the crypto asset.
Blockchain is essential for currency transparency and it validates all movements made with a digital asset.
Blockchain allows all transaction data to be transmitted to network users, who validate blocks in a transparent and decentralized manner. That is, when carrying out a transaction from user to user, there is no need for interference from a larger entity to allow the sending of coins, creating a welcoming environment for those who do not trust centralized financial institutions, such as the central bank.
Blockchain is completely free of any type of controlling entity, creating a platform for users who wish to carry out transactions anonymously. The Blockchain sends the information of each transaction to the network, which is validated by miners, and serves as a kind of extract where it stores all the information of its transactions, including its possession as the legitimate owner of that transmitted currency.
The price of bitcoin, unlike the traditional currencies controlled by central banks and governments, is determined by different factors. Because a currency is considered a commodity, its price or value can be influenced for the following reasons:
- The demand for bitcoins and the amount available for exchange and sale.
- The cost of mining a Bitcoin by the miners.
- Government regulations on the use and purchase of the asset.
- News and attention given by the press.
BTC, despite being digital, is finite. One day, it will be impossible to mine more coins within the blockchain, and this will end up making the asset even more scarce and valuable. You can already see this effect happening today, as the coin is programmed to decrease rewards via mining every 4 years.
Halving basically reduces inflation in the value of the coin by burning a certain amount of crypto into the blockchain. After being burned, these assets are impossible to recover, making mining even more difficult. The last halving took place in 2020, with the next one scheduled to take place in 2024.
In addition, the value and price is also determined by the number of people who want to buy or sell your assets. Just like a company’s stock, if more people are interested in selling, the value will obviously go down.
If more people are interested in buying, the price will find itself skyrocketing. The intention to buy and sell an asset can be expressed through public opinion, its introduction into pop culture, or even through news about the currency in the press.
How can I buy bitcoin today in Brazil?
Nowadays, buying the asset has become easier thanks to the use of several brokers spread throughout the national territory.
Each broker offers its own platform for the purchase and sale of crypto assets, and they offer different rates for those interested.
To create an account and trade bitcoin, you must be over 18 years of age, have an active CPF or CNPJ, have a good relationship with the IRS, and have a valid email address for free access to your account.
In addition to the various exchanges, some banks have also started to provide platforms for buying and selling crypto assets, so I recommend that you take a look at your bank’s app to see if there is an option to buy Bitcoin.
After creating your account on the platform of your choice, just follow the instructions of each broker to start making transactions. If you have questions about which platform to choose, we have a complete guide to help you buy and sell bitcoins in Brazil.
What is the price of Bitcoin currently?
The currency has been going through a turbulent price variation. In just 3 months, it ended up losing 50% of its value, going from the range of 40 thousand dollars ($40,000) to “only” 20 thousand ($20,000).
The factors for this sudden drop in price depend on everything I said above, but it also has to do with the loss of investor belief in the new digital currency.
At the end of July 2022, the currency ended up with a price of R$ 122,871.59 . If we’re going to talk about the dollar value of the currency, it ended the month at $23,753.40.
There are many tools to assess the value of BTC today, with one of them being Google itself . If you need a more consistent analysis, you can go to sites like Coinmarketcap, which manages the price of the top cryptocurrencies available for purchase and sale.
That’s it on the how bitcoin price is determined. Do you have a contrary opinion? Join Our Telegram Group let’s discuss it, and do well to click the share button below.