An overview of Bitcoin’s present value and the factors that affect it

While the monetary systems we know so far have been centrally controlled and regulated, Bitcoin is the first monetary system in the world to be self-regulatory in nature. In other words, the regulator is not the human factor (which has its own flaws) but the good old mathematics familiar to all and accepted by all.

Bitcoin is structured in such a way that its value can depend on only one factor, which is the market and the use itself. The value of the network, and thus the value of the bit coin, increases or decreases in proportion to the use of the system and the confidence in the system. An example is the Internet, which is growing in value in proportion to the number of users who consume and store information.

Today, Bitcoin is still very young and therefore particularly sensitive to any external factors that affect its use. The last major drop was in December, when China’s central bank ruled that Bitcoin did not qualify as a legal tender. In about a week, the value of Bitcoin fell by almost half. So what happened? In China, one of the largest markets for Bitcoin, the people panicked and Bitcoin began to be sold en masse. This affected the whole market and the price fell rapidly. Today, the pre-fall value has smoothly recovered.

Bitcoin is a deflationary currency by design. This means that there can be a limited number of units in the system – 21 million, so their value increases over time. And each unit can be divided into up to 100 million. In addition, the number of units designed for the system has increased over time so that the last unit can only be mined in 2140. So it seems to be a good investment in the long run. There is now a danger here of massive behavior, with everyone buying up piles for investment and a situation where usage is declining and the value of the units is starting to fall. It falls until traders start to suffer from goods and consumers from savings, and the market reactivates after which the value rises. Thus, there is a kind of balance that is automatically regulated by the market.

At the time of writing this line, one bitcoin costs 664 euros and this information is updated every 10 minutes, because then the so-called heartbeat of the network goes on. Every 10 minutes, online “miners” * confirm transactions and receive new bitcoins as a reward for the energy they spend. This keeps the system running. The prerequisites are only electricity, the Internet, at least two miners and the users themselves, ie the market.

Miner – a computer optimized for a bitcoin network, both hardware and software, that only performs calculations according to a certain algorithm. By calculation, which is the basis for the mediation and validation of online transactions.