.jpeg)
The Bitcoin (BTC) cryptocurrency has a limited number of coins that can enter circulation.
According to the protocol defined by the so-called Satoshi Nakamoto, the number of BTC coins that can ever exist is fixed at 21 million.
Due to the limited number of BTC that can ever exist, many consider Bitcoin to have been created to serve as a form of digital gold.
How do new bitcoins (BTC) enter circulation?
New BTC coins enter circulation approximately every 10 minutes. This is the period it takes for miners to store a block of transactions on the blockchain.
Each time a miner confirms a transaction, they receive BTC as a reward. According to the protocol, the reward for miners is halved every 4 years, or each time another 210,000 blocks are added.
Thanks to the gradual reduction of the miners' reward every 4 years, the last bitcoin is expected to enter circulation in the year 2140 .
When Bitcoin first began operating, the reward for miners was an incredible 50 BTC. As of 2020, the reward for miners has been reduced to 6.25 BTC.
Bitcoin Exchange Rate: How is the Value of Bitcoin Calculated?
The exchange rate of Bitcoin changes every minute.
Like other types of assets such as stocks, gold, and others, the Bitcoin exchange rate is influenced by numerous factors such as:
1. Conditions in global financial markets
Bitcoin is perceived as a means of preserving value as a cryptocurrency.
Although Bitcoin, as a traded asset, is highly volatile (it has a high percentage of price change in a short time), from 2009 to the present, its value has exponentially increased.
Since Bitcoin can be traded like stocks, precious metals, and other financial instruments, its prices are subject to changes.
The rise or fall of global markets is most often linked to geopolitical situations, global trade, etc.
Therefore, Bitcoin, as both a cryptocurrency and an asset traded on financial markets, is also not immune to the changes occurring in the world.
2. Bitcoin Production Costs
Like in any industry, the cost of production will affect the final price of the product.
The same applies to Bitcoin production.
As we mentioned earlier, miners and their computers are needed to introduce new bitcoins into circulation.
For a miner to have a better chance of confirming transactions, they need powerful computers, which require a large amount of electrical energy.
Therefore, investing in powerful computer equipment and accounting for the cost of the electricity that these computers will consume for bitcoin mining is necessary.
3. Supply and Demand
The price of Bitcoin also depends on the current supply and demand, or the mood of investors.
If cryptocurrency market prices are falling and analysts' forecasts and news from the media suggest a further negative price trend, it's reasonable to assume that investors will wait for a more favorable moment to buy.
A lack of interest in buying then leads to a domino effect where the price falls again.
When the price rises, investors buy, hoping the price will continue its positive trend.
4. Bitcoin in the Media
In recent years, the media have closely followed and reported on the price movements of Bitcoin.
News can be positive or negative, and they have a significant impact on investor sentiment. If the news about Bitcoin is positive, the price can increase, ultimately motivating investors to buy.
If the demand for Bitcoin is high, the price can rise further. Of course, if the news is negative, both the price of Bitcoin and demand will decrease.