As you should know by now, Bitcoin is not operated by a centralized authority. There’s no singular group or entity in charge. No one company or group sets the price. There are no CEOs, no executives and no shareholders.
It’s a commodity. Its price goes up or down based on simply the law of supply and demand.
That said, Bitcoin prices do vary from, place to place, exchange to exchange. Why, well by logic, there may be different supply/demand in different countries.
Bitcoins are also not available in any such physical form, like an actual coin or paper bill.
Instead, Bitcoins are stored on a ledger or blockchain which can be publicly assessed. It’s just code. 1s and 0s.
It’s also fully transparent. Each and every transaction is verified on this shared public ledger.
The price of a Bitcoin depends on — you guessed it — the supply and demand. When demand for Bitcoin increases, its price also increases. When the demand for Bitcoin falls, the price falls with it.
Important to remember that there is a cap on the number of bitcoins that can be circulated. Only 21 million bitcoins will ever be created. But don’t worry, each “coin” can be broken up into smaller pieces (also called “sats”). You get but as small as one-hundred-millionth of a Bitcoin!
The overall supply of Bitcoin is limited to 21 million coins, with just over 19,3 million coins currently in circulation at the time of this writing. The remaining coins are expected to be mined by 2140.
Still, that means when the demand increases, the supply doesn’t. If demand for paper towels go up in the USA, manufacturers can make more. Not true of Bitcoin. It’s fixed.
But just like say stocks, the price of Bitcoin can change on a whim.
Sentiment changes and investor psychology, bad news/good news and even market manipulation. Yes, as Bitcoin is in limited supply, “whales” can influence the price up and down.
There is also regulation. Yes, Bitcoin is decentralized but still can be hit by regulators. Governments can ban companies from accepting crypto.
But as the adoption of Bitcoin spreads, that volatility should diminish and someday stabilize.