Foreign policy, a country’s inflation rate, and economic growth affect the value of national currencies. But since the Bitcoin network is a decentralized platform and is not run by any institution or government, this does not affect the rise in Bitcoin prices. In this article, we will look at the factors that affect the rise in the price of bitcoin.
Factors affecting Bitcoin price increase
Various factors affect the rise in the price of bitcoin. These factors are: 1- Constant supply and increasing demand 2- Acceptability and applicability 3- Increasing the cost of extraction 4- Inability of Bitcoin competitors 5- Increasing the number of exchanges and ATMs 6- Stability and security of bit network Queen
Constant supply of increasing demand
According to the principle of supply and demand, with the decrease in the supply of a product and the increase in demand, the price increases and vice versa. Contrary to national currencies that central banks can print to their liking, Bitcoin is limited in number. Only 21 million bitcoins will be produced during the extraction. Of course, this constant supply does not necessarily increase the price. But if demand increases, bitcoin prices will rise.
Bitcoin’s acceptability and usability
Bitcoin was created for the purpose of being useful to people. On the other hand, the more popular these cryptocurrencies are, the more valuable they become. So it can be said that the applicability of Bitcoin increases its acceptability and increases its price. When more people and organizations use Bitcoin, a wave of hope will be injected into the market and we will see a rise in prices.
Increase the cost of extraction
Bitcoin mining requires advanced and expensive hardware. These devices also consume a lot of electricity. On the other hand, the production of new bitcoins is gradually decreasing and the extraction process is becoming more difficult. As a result, more processing power is required. When mining costs increase in this way, miners are reluctant to sell their bitcoins at low prices.
There are more than 2,500 cryptocurrencies in the world of digital currencies. On the other hand, due to the problems of common currencies, the need for cryptocurrencies is increasing. So there is tough competition between digital currencies. Bitcoin has more competitive advantages, including security, compared to its competitors. These benefits bring it popularity and thus increase prices.
Increasing the number of exchange offices
Increasing the number of exchanges that make bitcoin transactions, as well as ATMs that convert bitcoins into cash in reverse, will increase the price of bitcoins. Easy access can increase acceptance.
Bitcoin network security
What sets Bitcoin apart from other cryptocurrencies is the high security of its network. During these 11 years, the security of the Bitcoin network has increased even more than before. This security makes it easier for people to think about their assets and increases demand, which in turn increases the price of bitcoin.