Bitcoin Value Jumps
Bitcoin wasn’t so popular in 2009, the year it was created. People weren’t aware of its novelty and benefits. It cost about $0.001 back then. Nothing serious has happened in several years, therefore, its price increase was slow and smooth. After problems in the Cyprus banking sector arose in 2013, Bitcoin was noticed and drew attention. Chinese rushed for BTC in November 2013. This caused a significant price lift by thousand percent.
Unfortunately, in February 2014, Bitcoin value decreased by 40% after a distributed attack attempt on the Mt.Gox facilities. Then, Mt.Gox supported approximately 60% of all BTC transactions. This depressive trend held until January 2015 when the growth of bitcoin popularity overcame negative opinions. Since May 2016, the price of bitcoin has been rising gradually. Then, another market crisis caused the bitcoin value drop by 14%. Today BTC is relatively reliable.
BTC price is influenced by a plenty of aspects. Two major and obvious factors are the market supply and demand. Bitcoin has no physical analog, thus the only way to purchase it is with the help of crypto exchange platforms. The price of any currency highly depends on demand. People who buy the currency lift its price. And, vice versa, when funds are sold their value drops. The same is true for any cryptocurrency. The example is bitcoin increase when Chinese holders shown a high demand for it.
Bitcoins quantity and participants
Generally, there will be no more than 21 million bitcoins mined. They are emitted periodically, and their income decreases regularly. There are about 16,7 million of BTC in circulation so far. More than 14 million users have bitcoin wallets, and this number increases daily. Obviously, its cost will increase.
Human factor and the media always influence people and push them to act. For example, the arrest of Ross Ulbricht in 2013 affected bitcoin price, and it fell by 25%.
The Bitcoin network is free to join. Anyone can get a code, compile it, and receive a working wallet software. Everybody can see it, people intend to trust it more when fixed bugs are seen, and the price is supposed to rise. On the other hand, some negative events like hacking can decrease the price. For example, Bitfinex problems with security in August 2016.
World politics and economics
The world is so globalized today that any kind of public event concerning cryptos can influence prices.
Volatility reflects possible fluctuations in the money value. The higher volatility is, the wider rate range the coin can get. To put it another way, the value varies more as time passes. The volatility of bitcoin is about 10%, and it keeps decreasing.
Another important thing is that bitcoin is not backed by anything. No precious metals or deals stand behind BTC to support it. Hence, there are other money features that BTC possess:
- Uniformity — each BTC is the same unit with no specific parameters. They are equal.
- Divisibility — the smallest BTC unit is called Satoshi.
- Portability — you can carry your assets with you as standard digital money.
- Longevity — bitcoins will last as long as the network lives. They don’t go out-of-date.
- Recognition — bitcoin can be compared with other similar money but they will always be clearly different.
- Safety — bitcoin can’t be counterfeited, stolen, or manipulated.
Bitcoin fundamentally differs from common money. It is based on complex mathematical algorithms that guarantee its stability. However, the history of bitcoin holds considerable price changes that happen to fiat money, too.
After Mt.Gox was founded in 2010, people started trading BTC for USD. That led to price increase up to $1. Unfortunately, in February 2014 the DDoS attack was performed and price dropped by 30%.
In October-November, 2013 many organizations announced their support for bitcoin. This caused a massive purchase of BTC in China, and its price rose up to $1,150. Afterward, People’s Bank of China restricted BTC transactions, and the price dropped to $500.
Mass media subjected
Bitcoin has lifted up twice after several magazine articles. First that happened in April 2010, and then in April 2011.
Forecasts on the price issue
Currency predictions are not reliable. All currencies are influenced by various factors and might perish in weeks or days. Such examples include Zimbabwean Dollar and others. They experienced a devastating price drop and hardly cost the paper they were printed on.
Bitcoin can also be knocked down by factors like engineering progress and restrictions, programing complexity, governmental decisions, and other crypto proposals. However, no visible threats can influence the BTC rate. Many investors and the Bitcoin community participants are sure that BTC is not a “bubble”. Bitcoin is rather young cryptocurrency based on the new and unexplored technology.