How The Value Of Bitcoin Is Determined

Clare Louise February 1, 2019 Comments Off on How The Value Of Bitcoin Is Determined
How The Value Of Bitcoin Is Determined

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When it comes to making any investment, it is vital that you understand the industry or market that you are looking to invest in, and this includes cryptocurrencies such as Bitcoin. Before you part with your hard-earned cash, you will want to do plenty of research to ensure that you understand the market. If you are thinking of investing in Bitcoin and wondered how the value is determined, here is a quick guide to help you out.

Supply & Demand

As with many commodities, cryptocurrencies value is determined by the supply and demand of the currency. New Bitcoin can be created when miners’ complete blocks of transactions and the way that the system is designed the rate at which new coins are introduced to the market will slow over time. The price of Bitcoin can be increased when the demand for the coins increases higher than the production rate, driving the price up and increasing the value of your investment. Alternatively, when production is more than the demand for the cryptocurrency, the cost can also be driven down, decreasing the value of your investment. Making your investment can be done simply, and Bitcoin Dealers shows you how to buy cryptocurrency in Melbourne, as well as anywhere else in Australia.

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Competing Cryptocurrencies

One factor which may affect the demand for Bitcoin is the other competing cryptocurrencies that are available in the marketplace. Bitcoin was the first cryptocurrency and since its inception there have been hundreds of different cryptocurrencies that have come to the market, all competing with Bitcoin. The more choice that is available in the market, the more competition for Bitcoin which can reduce the demand, and in turn also reduce the value.

Regulations

Some investors are wary of cryptocurrencies, and some financial institutes deem them as only being suitable for criminal activities and laundering money. However, the lack of regulations and total transparency make them a popular investment vehicle for many people. Cryptocurrencies are slowly moving into the mainstream, and with their increasing popularity, it is an area that the financial institutes can no longer ignore. There is a growing call for cryptocurrencies to be tightly regulated as other currencies are, but until now this has not happened which is one of the reasons why people see them as an attractive investment opportunity.

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Should You Invest In Bitcoin?

As with making any other significant investment, you should do your homework thoroughly on Bitcoin before plunging head first and ensure that you understand the market fully before parting with any money. There is a wealth of information that is freely available on the internet on this subject and taking the time to understand the investment vehicle can pay off dividends in the future. Investing is a personal choice, and you should not let anybody push you into doing so unless you feel comfortable. If you want to find out more about how Bitcoin works, there are websites you can check that have lots of useful information on many different investments, Bitcoin included.

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