How is the price of bitcoin formed?

Define what is Bitcoin It takes time because, like any new technology, cryptocurrencies raise doubts. One of the main ones is why its value is so volatile, how come there are so many different prices for bitcoins.

Because of how they are designed, bitcoins or BTC build their value over supply and demand movements. There is no central authority in Bitcoin: there are no companies or governments that regulate the network or the use of its cryptocurrency, much less its price.

In this way, beyond the ups and downs from minute to minute, two major factors guide “what a bitcoin comes out” on a large scale: its usefulness and scarcity.

Bitcoins cost something because there are a community of users who trust them as a way to transfer and store value; and also more and more companies that accept them as a form of payment. Thus, its usefulness increases day after day.

On the other hand, bitcoins are scarce goods: there will only be 21 million, and there are already 18.5 million circulating. These bitcoins are not issued; they are «mined» from a computer process that you can learn a little more about by reading this article about blockchain and mining.

So, we could say that bitcoins are becoming more and more useful and at the same time more and more scarce. In short, they are becoming more valuable every day.

The Bitcoin Price Agreement

All these elements come into play when two people agree on an amount that leaves them satisfied in a purchase-sale of bitcoins.

Throughout its history, that amount has ranged from pennies on the dollar in the early days of the Bitcoin network to nearly $20,000 in December 2017.

In each operation, those involved agree on a price. Depending on the method of purchase, this is more or less obvious.

who buy «in hand» to another person they agree on a value and a commission according to the trust, the amount or the form of payment. There are many ways to find these sellers: by recommendation, in specialized forums and even in Telegram groups.

You can also buy bitcoins directly from other users at online P2P platforms (peer-to-peer or between peers), where you can review the crypto sales «offers» and choose based on the best price, the payment method and the seller’s reputation.

In the exchanges, on the other hand, you can keep a «real time» control of the purchase and choose to do it at the best possible price. These sites allow you to load funds and trade at any time with sell orders loaded by other users, and your own buy orders.

Other types of platforms are brokers, who buy and sell cryptocurrencies at all times. This type of service establishes the price at which it operates in bitcoins, in exchange for benefits such as security, simplicity and speed. Therefore, this is the most recommended way for novice users.

How to define the best Bitcoin price

So what is the best way to buy bitcoins? If we understand that It is not only paid with money, but also with time, difficulty and fears, what is the best price at which you can get BTC?

Everything depends on the needs of each user: the urgency to obtain them, the desired form of payment and the experience you have in cryptocurrencies.