Undoubtedly 2017 has been the year of Bitcoin, which has not stopped reaching historical records during the last months. We analyze what causes the digital currency to go up or down so that you better understand the nature of this cryptocurrency. Undoubtedly 2017 has been the year of Bitcoin. The most famous cryptocurrency of all has not stopped chaining record values, which has earned him to make the leap from specialized media to generalists, and be almost a recurring theme in any bar
Throughout this year the price of the most used virtual currency in the world has been revalued more than 1,700%. If at the end of 2016 the currency had a price of 968 dollars, today the Bitcoin is quoted at more than 17,000 dollars per unit. And although I have also starred in some striking drops that always speak of its high volatility, the fact is that the cryptocurrency seems to have stabilized for months and follow an upward projection.
Given these scandalous figures and the presence in more and more media, it is normal that during this year we have gone from asking ourselves what is Bitcoin? to ask ourselves if we should buy a couple (or more) units of these croupiers. But why the Bitcoin increases or decreases in price?
Being very basic we could summarize that the price of Bitcoin is worth what people are willing to pay for it. That is, given its digital and decentralized nature - it is not regulated by any banking entity or country whose regulations or circumstantial factors could influence or determine its price - the only factor that determines its value is that established between supply and demand. This being the case, the only thing left to ask is, OK, and what is it that makes people want to buy or sell their bitcoins? To understand what it is that has led the digital currency to exceed $ 20,000 in one of its days record, or lose more than 20% of its value in just a few hours we must understand the nature of Bitcoins and how it relates to the current financial and geopolitical system
A little history The cryptocurrency, created by a collective or a single person under the pseudonym of Satoshi Nakamoto wanted to respond to a form of economic transaction that was not influenced by possible financial policies or historical events, such as the international crisis that had just occurred in the world . Like gold, Bitcoin was born to not depend on the outside. The technology through which all this was designed responded to the name of blockchain. Maybe now we all have some idea of what the blockchain implies, is and assumes. But ten years ago, this technology based on an innovative blockchain system that allowed to contain at all times an updated chain of accounting generated by bitcoins instantly, was totally unknown. Through the chain of blocks Nakamoto had managed to give a solution to the problem of digital transactions on the possible double use of the same digital currency. That is, if I have a ticket and I spend it on buying something, I must deliver it to the other party to receive the merchandise. But in a digital transaction it is more difficult to trace that I have actually delivered that money and I will not use it again.
10 facts you should know about the blockchain The chain of blocks what it supposed was a global accounting in which each and every one of the transactions that are being made are registered. They are encrypted in blocks and remain open to all users. In addition given its characteristics, the historical record can never be altered and the more this chain grows the more complex it is to attack it. The possibilities of hacking them therefore become impossible as more grows. Only a hacker with a computing power superior to that of all the nodes that make up the chain could hope to disturb it. And the expense that this would presently given the amount of bitcoins would far exceed the benefits obtained. The process of verification of transactions and their registration in the global chain is known as mining and is also the mechanism through which bitcoin is created. The miners allow that the recent transactions are grouped in blocks but for that they must solve a complex algorithms. The difficulty in putting together this kind of puzzle varies and adjusts every two weeks. The first one that manages to stir them rewarded with bitcoins. The miners are therefore essential in the operation and evolution of Bitcoin, because thanks to them new crypto-currencies are generated. Each time a block is verified, new currencies are introduced into the system. The rate at which these new bitcoins are released is controlled in such a way that every 4 years is reduced by 50%. Thus, it is calculated that the number of bitcoins in circulation will never exceed 21 million. Currently around 17 million are in circulation.
We therefore define the defining elements of Bitcoin: virtual, anonymous, decentralized, not subject to any finite monetary authority. Some characteristics that affect the price rise and fall.
First rises in the price of Bitcoin
Let's go back to the subject of its value. When the Bitcoin was born in 2009 its price did not suppose more than a handful of cents. The Bitcoin price started at 1,309 bitcoins for every dollar, a value estimated to be the cost of mining at that time.
At that time the digital currency was completely unknown, nobody saw value in it, and did not want to acquire it, so the price remained very low. The price of Bitcoin was the result of this ignorance.
Since then what has happened is that bit by bit the community of blockchain users and with this Bitcoins community, has been increasing over time. And the greater number of people wanting to acquire something, we all understand that "this something" is acquiring more and more value.
"The Bitcoin distribution is like concentric circles, started with 5 or 10 people, the cryptanarchists and anarcho-capitalists. It was then coming to other places in society as it became popular and more user friendly services appeared and an ecosystem was formed, "explains Matías Bari, director and founder of digital banking and stockbrokers SatoshiTango.