“How much does a Bitcoin cost?” like questions are common but very important for when investments are starting. That’s why we’ll explain everything about the value of bitcoin! The increase in interest and enthusiasm for cryptocurrencies has resulted in an influx of money into the virtual currency market. However, entering the world of bitcoins can be intimidating, especially since you are dealing with a technically complex issue.
With many people making considerable rates of return on their investments, it is important to understand how much a Bitcoin costs and how we should value our gains (or losses) when it comes to the cryptocurrency universe.
Bitcoin: Price x Value
In the financial world, value is everything. Understanding the real value of a stock, commodity or currency can be a complex process involving things like free cash flows, asset-based analysis and other arcane concepts, but the underlying idea is quite simple: “What I want to buy is worth asking price? ”.
If the value is too high, it is probably a bad investment. If the value is low, it can be a source of profit. As Warren Buffet once said, “ The price is what you pay. Value is what you get. “
However, when it comes to Bitcoin, traditional valuation models are too old-fashioned to provide much insight. Valuation experts have been consistently confused by Bitcoins, and respected analysts have offered perfectly rational estimates ranging from 10 dollars to 1 million dollars.
There is no consensus, and part of the reason for this is that nothing like Bitcoin has existed before. The form of value and price when thinking about how much Bitcoin costs, is completely changing the way we think about money, assets and value. It is, therefore, like trying to measure the internet with a ruler: it makes no sense.
Determining the Fair Market Value
When considering a cryptocurrency exchange scenario, the simple calculation of capital gain gets a little more complicated, considering a taxable event. Let’s look at a simple example to understand how a fair market value relates.
It is said that you purchased 100 dollars in Bitcoin, including transaction and brokerage fees. That 100 dollars currently buys around BTC 0.01 Bitcoin. Now, let’s say that two months later you trade all 0.01 Bitcoin BTC for 0.16 Ether. How would you calculate your capital gains for this cryptocurrency-to-cryptocurrency trade?
This is simple and depends on how Bitcoin’s Fair Market Value was at the time of trading. Let’s say that, at the time of trading, 0.01 Bitcoin was worth R 160 dollars. This would make the fair market value of 0.01 Bitcoin R $ 160. You could then calculate your capital gains based on this information:
160–100 = capital gain of R $ 60.00
For this cryptocurrency-to-cryptocurrency trade, you owe the government a percentage of your earnings of R $ 60.00.
This calculation and concept of fair market value create a wide variety of problems for cryptocurrency operators. Some traders have been trading cryptocurrencies for months, possibly years, and are not keeping track of the dollar value or the Fair Market Value of their cryptocurrency at the time of trading.
This is the information you need to accurately report and file your taxes to avoid income tax problems. Depending on the volume of trades carried out, calculating earnings accurately can become extremely tedious and possibly very difficult to do by hand if you are not keeping track of the Fair Market Value.
All of these points are important to be considered in order to finally define how much a Bitcoin costs since they interfere in the value and price of the currency.
What is the value of a Bitcoin?
Bitcoin’s value is a perception of its benefits and usefulness. The term value, as used here, should not be confused with price, which is how much a Bitcoin costs monetarily.
Bitcoin’s usefulness and consequent value are a series of results of various aspects of its innovation, its network and its characteristics. We will address the most important factors that lead your users to consider Bitcoin valuable, and so we come to a conclusion together about how much a bitcoin costs.
1.1 Technological Value
The technological value of the currency makes it more difficult to know exactly how much Bitcoin costs.
Since Bitcoin is decentralized through a fully distributed point-to-point network, there is no central server on which the Bitcoin protocol depends for its existence. Like BitTorrent, Bitcoin is therefore resistant to censorship and cannot be disabled.
This aspect of Bitcoin is critical, as it means that continued use of Bitcoin is not subject to the approval, opinion or action of any outside authority. Being a resistant alternative to censorship of official currency and payment systems makes Bitcoin an irreversible revolutionary technology!
1.2 Social value
In addition to the innovations of Satoshi Nakamoto in the field of computing, we had as a consequence a major milestone in the social implication of the way Bitcoin innovates payments and transactions.
A distributed registry and a decentralized network mean that no entity needs to be trusted for the Bitcoin protocol to work. Each Bitcoin user owns and controls their own money, and is solely responsible for its security and use.
This dimension of Bitcoin eliminates the risks associated with having to rely on outside authorities - in fact, the network effect of Bitcoin’s decentralization will, over time, eliminate centralized authorities everywhere.
1.3 Value in development
The development of Bitcoin makes it unique and adds great value to the currency.
Bitcoin is made available as Free and Open Source Software under the MIT license. In addition, the protocol is also developed through the Open Source project model, which encourages community contribution and collaboration.
Collaborative development of publicly available source code is considered preferable to closed source code developed by a contained team. Bugs and security fixes are identified and fixed quickly - and all the time - while the principle of strength in numbers and diversity of skills allows for greater productivity.
Leading Bitcoin developers are mostly unpaid volunteers who maintain and manage the Bitcoin source code. And their work is one of the most laborious in the area. Coredevs contribute thousands of hours of code development and strictly adhere to Satoshi’s design specifications in order to translate Bitcoin’s vision into reality.
For these and other reasons, it is possible to say that knowing how much a Bitcoin costs go far beyond its market price. Now the icing on the cake, in terms of value:
1.4 Miners are valuable
Bitcoin miners are rewarded with Bitcoins for processing block transactions. Mined blocks are usually attached to the blockchain and become part of the public record.
By processing transactions, building the blockchain and hosting the end-to-end nodes that maintain network consensus, miners represent the backbone of Bitcoin’s distributed network.
With their incredible task of keeping the network functional at all times and maintaining the precious blockchain, miners, in partnership with the developers, are the protocol users who add the most value.
To know how much a bitcoin costs you need to add all these values mentioned above and even more, social, technological, token and computational revolution. Finally, we come to the conclusion that there is no intrinsic value of Bitcoin, it is all supply and demand.
High demand and limited supply make Bitcoin the most valued currency in the world. As you may know, Bitcoin production will stop at some point in the future, and if demand continues to rise as it does today, Bitcoin could be worth a million dollars.
How much does a bitcoin cost?
That’s the riddle, there’s no official Bitcoin cost. Bitcoin’s price is set by whatever cost people are willing to pay.
The price of Bitcoin is usually shown as the cost of a bitcoin. However, exchanges allow you to buy any amount, and you can buy less than one Bitcoin. To illustrate, see the graph below showing a history of Bitcoin prices from 2010 to 2017:
To find out how much a bitcoin costs, there are also two options online: first is through a cryptocurrency exchange, in which you can use fiat money to withdraw Bitcoin. Thus, prices can vary, which depends on the exchange rate policy. Another option is designated sites, focused on Bitcoin. These usually charge small fees, but nothing as big as in case of exchanges.
Track the bitcoin price in real-time
Bitcoin always has a price, 24 hours a day, 365 days a year. There are no opening or closing hours like in the stock market.
The course is set on international online exchanges where buyers and sellers meet to trade bitcoin. The price goes down? There is then more supply than demand. But if the price goes up, it means that there is more demand than supply! It is actually very simple. On this page, you will find more details about the current bitcoin price. As we are a Dutch company, all amounts are in euros.
Bitcoin price history
Since the launch of bitcoin in January 2009, its price has experienced strong fluctuations. Movements of 10% or more per day are not uncommon. This phenomenon is known as price volatility and regularly makes this currency appear in the media. At the end of 2017, bitcoin hit its all-time high to date. A bitcoin was worth around 17,000 euros at that time.
Some facts about the price of bitcoin over the years:
The price of bitcoin has increased significantly since its introduction in 2009. In May 2010, an American software developer bought two pizzas for 10,000 bitcoin. We hope he enjoyed them, as these pizzas would have been worth millions at today’s prices.
In early 2013, the price of bitcoin was set at 25 euros. At the end of the year, a bitcoin would have cost you a little over 1000 euros! The financial crisis in Cyprus was to some extent responsible for these price increases.
But things took a turn for the worse in early 2014. The market was hit hard by the bankruptcy of Mt. Gox, the first and largest bitcoin exchange at that time.
However, there was also more encouraging news, especially at the local level. Arnhem, a city in the Netherlands, was a pioneer in this area. You find in this city many stores with a sticker indicating the following text: we accept Bitcoin. An important step in the acceptance of bitcoin as a means of payment.
A year later, Bitstamp, another big exchange, was also the target of a big hack in which 19,000 bitcoins were stolen. the general sentiment on the markets was negative and the price fell back to 180 euros.
In 2017, bitcoin struggled to climb back up to a price of $ 1,000. The second half of 2017 attracted media attention, which accompanied an exponential growth in prices. Bitcoin had reached a new all-time high of 17,000 euros.
2018 had started well, but very quickly it became clear that 2018 would not be a jubilee for the course. Eventually, the value of bitcoin fell back to 2,862.
Will bitcoin stabilize?
The price of bitcoin is characterized by large fluctuations. This is called volatility. One of the frequently asked questions is why the price is so volatile. To understand this, it helps to compare the total market capitalization of cryptocurrencies with other financial markets.
The total value of the bitcoin market is around 180 billion dollars. The market value of the entire crypto market is around 120 billion dollars. While this may seem like a huge amount of capital, it is actually just a drop of water in the ocean. By comparison, the total market value of Apple, a single company, is five times as high: over $ 600 billion.
In comparison to other markets, the cryptocurrency market is therefore still very small. This means that a small amount of capital alone can move the price. On top of that, a lot of micro traders are active. Mass effects, but also new information can cause huge fluctuations overnight.
If you compare the total value of the crypto market with the totality of the stock markets, it would look like the image below. The blue blocks represent the stock market, and the green blocks the crypto market.
What to expect from the price of bitcoin?
The person who can predict the course of the price can potentially make a lot of money. In any case, we do not venture to make forecasts. However, we are often asked what our expectations are for the price of bitcoin. In the short term, there is not much to say about it.
You can however use our ROI table at the top of this page. ROI is the acronym for Return On Investment, you will be told if the bitcoin you bought has lost or gained in value, and with what percentage. In this table, a comparison will be made between the situation of one year, three years and five years ago.
We can tell you that the price of bitcoin depends on several different factors. The information is given in the media, for example, often has a great influence, in any case in the short term.
When the boss of Twitter says he expects bitcoin to become the currency of the internet, this information is spreading everywhere and is also having a positive influence on the price.
On the other hand, announcements about government regulations can lower the price. Even though the regulations are not necessarily bad. This can reassure large investors, prompting them to enter this market.
The most important thing is really staying on top of how the bitcoin ecosystem is developing and being sure that its fundamentals are strong. Fortunately in this area, the developments are very good. The proportion of people using bitcoin has increased dramatically, as has the number of transactions made.
The computing power of the network has never been higher and the number of developers busy improving the network also seems to be increasing. Because these things don’t seem spectacular, the media often leaves them in the dark, but it’s actually these things that make the difference.
In addition to fundamental bitcoin analysis, investors use technical analysis to assess which way the price will move in the short and long term. It may sound very complicated, but we are helping you figure it out.
Only invest an amount you can afford to lose
We recommend that you only invest an amount that you are prepared to lose. We believe that an investment in bitcoin is one of the most interesting you can make, but also one of the riskiest.
We present in this material, that the value of Bitcoin cannot be reduced to a single element or resource. Many aspects of cryptocurrency contribute to its usefulness and offer benefits that outweigh traditional paper money and its costly systems in some ways.
At the time of this story, an average of 331,000 Bitcoin transactions was carried out in one day with a market value of $ 11,748.32. The big question is not how much a bitcoin costs, but how much a Bitcoin will be worth when you decide to invest.
You need to observe the price according to the chart at different time intervals, such as hour, week, month and year, to find support and resistance. This way, you will make a smart decision when buying (or selling) your cryptocurrencies.