While Bitcoin has just celebrated its ten years of existence, it seems interesting to wonder if it can be considered a success. The Bitcoin is unanimously considered the pioneer virtual currency and most emblematic. It is qualified as virtual currency even though it lacks an intrinsic quality to currencies, namely the stability of its value. Indeed, as many investment analysts have pointed out, Bitcoin has already crossed four spectacular bear markets (or bear markets in the language) in 2018 when we have just passed half of the year. As an investor, is it possible that you don’t care that your money periodically loses almost 20% of its value? The answer seems obvious. All sensible investors bitcoin price today will find this situation problematic. Indeed, they want to be able to afford certain things whether cryptocurrencies have had a good day or a bad day. However, with Bitcoin, the price can fluctuate so suddenly and so violently that it becomes problematic.
What explains these ascents and descents?
Faced with these incessant ups and downs of Bitcoin prices, we are therefore entitled to wonder what may be the causes behind these movements. First, we can say that bitcoin price today was designed in this way.
The underlying idea behind the creation of Bitcoin was to design a decentralized system that would allow anyone to transfer things online without having to resort to the presence of a trusted third party such as a bank. However, the problem is that the only way to do this was to have each member of the network keep a record of each Bitcoin Blockchain transaction since its origin. Thus, everyone could know at any time who had Bitcoins to spend. This choice requires great computing power, as we saw in our article on Bitcoin mining.