Bitcoin is a decentralized digital currency, created in 2009 by a pseudo-anonymous creator named Satoshi Nakamoto. It operates on a technology called blockchain — essentially a public ledger that records Bitcoin transactions transparently and securely, with no central authority controlling it.
Some key things that make Bitcoin unique as an asset class:
- Fixed supply — There will only ever be 21 million bitcoins created. This scarcity is a big reason it has value.
- Decentralized — No single entity, like a government or bank, controls the Bitcoin network. It operates via thousands of computers running Bitcoin software around the world.
- Pseudo-anonymous — Bitcoin isn’t fully anonymous, as all transactions are public on the blockchain, but users don’t have to provide personal identity information. Accounts are identified via cryptographic keys and addresses only.
What Drives Bitcoin Price Changes?
Some key factors that impact Bitcoin’s often volatile price:
- Supply & demand — With finite supply and unpredictable demand that fluctuates rapidly, you often see big swings. News events can spark surges in interest and huge price spikes.
- Regulatory changes — As major economies explore crypto regulation, news can move markets significantly if rules appear more friendly or restrictive.
- Market instability — Bitcoin is seen as an alternative store of value to traditional currencies by some investors who lose faith in things like the dollar or euro during times of geopolitical tensions or financial crises. Its price often rises when tensions flare up globally.