Bitcoin Pricing

When you first get into bitcoin, whether it's mining or investing, you've got to have a good grasp on the market.

This post is just to give you a little bit of understanding what some of the factors are that can effect the price, and in turn, your investment.

Supply and Demand

This is a very basic factor and is involved in basically every things cost. This principle simply states that if there is a good deal of something available, lets say bitcoins, the demand will be very low which decreases its value/cost. Inversely, if there is very little supply it will push the cost higher.

Circulation

If you mine bitcoin, i very much encourage you purchase items with it, it strengthens the bitcoin economy through natural circulation. It helps secure a real world cost to the currency if its able to actually be used instead of just sold to third parties. now this may not be a factor to many currencies but you need to keep in mind that this is a decentralized currency, so its cost/price is very volatile because its not governed by anything but the people.

I hope this short post helped you begin to grasp how the bitcoin market fluctuates and when it does, the reasons it does.

Comments

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