Posted: 01.07.2021 | 09:53
How to Calculate the Value of Bitcoin and Other Cryptocurrencies?
How Bitcoin Value Is Determined: The Bean Example
The basis for determining the value of Bitcoin is no different from other traditional currencies or objects. We can explain how the value of Bitcoin is determined simply by determining the price of the beans.
The value of the bean is determined on the basis of two basic questions; how much the seller of beans is willing to sell and how much the buyer is willing to buy. The seller wants to sell the beans for 8 TL per kilo, and the buyer wants to pay 7 TL per kilo. In this case, there is no trade in the beans, but if the buyer and the seller agree to buy and sell the beans for 7.5 TL per kilo, the shopping takes place.
If the production (supply) of the beans increases seasonally, the price of the beans may decrease. In a season when beans are scarce, supply will be more than demand, so beans will appreciate in value and may increase in price.
The same is true for the valuation of Bitcoin and other cryptocurrencies. Only the heterogeneity among beans is not that great in Bitcoin. Of course, technically each cryptocurrency is different, but it can be said that they are homogeneous.
Just as the exchange rate of local currencies is constantly changing, the price of Bitcoin is not fixed and is constantly redefined in the cryptocurrency markets. Price changes occur due to supply and demand, as in the case of beans.