Supply and Demand is the immediate economists answer – but there is a little bit more to the story behind the scenes that fleshes out the more fundamental moves in bitcoins price. Ultimately there is no value apart from the perception of value – and that is what drives the Bitcoin price – the perception of its value – just like a stock and the expectation of its returns and revenues.
The news affects its Bitcoin price . Satoshi Nakamoto being uncovered as Craig Wright led the price up as all the free press provided a free form of advertising for Bitcoin itself. As the community grows because of press – as 10 million wallets becomes 20 million – then the amount of people involved has increased and the base case for demand. News increases the immediate demand flow from people entering the ecosystem.
We track some social data which shows you how quickly the bitcoin community is growing and how active it is in terms of chatter – reddit posts, twitter followers etc. You can play around with this data here and plot it against the BTC price with a host of other indicators.
The block reward halving in 2016 is going to be an interesting period for the bitcoin price as it will have huge ramifications on the mining industry that might depress the price whilst generating huge
As the ecosystem gets built up around bitcoin it can gain demand for its discount potential as in the case of wallets such as airbitz. – the ability to buy amazon goods at a discount or starbucks vouchers! This is the main snowball effect and where a lot of heated discussion has been about whether bitcoin has a killer app that automatically brings it mainstream even if users don’t realise they’re using […]
