1 Bitcoin to GBP – How To Convert & Calculate The Value?
Table of Contents
Founded in 2009 by Satoshi Nakamoto, Bitcoin is the world’s largest cryptocurrency currently. In the recent past years, bitcoin has gained high importance, and earlier value used to be significantly less compared to what we see in today’s era. As we all know, like other cryptocurrencies, bitcoin also is decentralized and is not backed by a government neither it has a central bank. Use of the Blockchain Type system record all the transactions that document the history of every transaction and helps in proving ownership. In this blog, let’s see how to convert 1 Bitcoin to GBP.
Since bitcoin is not like other traditional currencies hence investing in bitcoin is a bit different and is a different experience than buying a stock or bond. Eventually, there are no corporate balance sheets available to review. Bitcoin Up is one of the best platforms to start bitcoin trading.
Understanding what determines bitcoins price
Since bitcoin is different from traditional currencies having no central banks and neither an authority of government over its control, all the factors that determine the value of a conventional currency like monetary policy, inflation rates, and economic-growth measurements do not affect bitcoin at all.
At the same time, different sectors affect the prices of bitcoin. Some of them may be the supply of bitcoin and its demand, cost of production through the mining process, rewards given to bitcoin miners, number of competitors in the market and other cryptocurrencies, the exchanges it trades in, and regulations enforced by the government.
Supply and demand
Controlling how much of their currency circulates by modifying the discount rates, changing reserve requirements, or involving in open market operations can be done quickly by the countries that do not have a fixed rate of the forex market.
New bitcoins are only introduced in the market when the miners see that the rate at which new coins are being created is prolonged, and secondly, the number of new bitcoins being built at a fixed rate affects the supply of bitcoin in the market.
So when the rate at which new bitcoins are being created becomes slow, and the demand in the market increases faster, then this scenario leads to the prices of bitcoin going high in the market. The block rewards that are offered to bitcoin mining have made the circulation growth of bitcoin slower. This can be seen as artificial inflation in the cryptocurrency system.
Moreover, the number of bitcoins allowed by the system to exist also has a significant impact on the demand and supply of bitcoins. For instance, recently this number is decided at 21 million and once this number is achieved all the mining activities shall be halted till further notices.
Although bitcoin is the world’s largest cryptocurrency and is very popular amongst users, there are still other suitable cryptocurrencies that attract users and pose a tough competition to bitcoin. All these great competitors are Ether, Tether, Binance coin, Cardano, and polkadot that are continuously posing threats to the popularity of bitcoin.
Nevertheless, having so much competition in the market, demand these cryptocurrencies to polish themselves more and more, which eventually benefits customers. This sense of competition makes these artificial currencies get better and better instead of providing better options to the users and becoming more user-friendly these days. But the fact that bitcoin is the most highlighted of all gives it an advantage over other cryptocurrencies.
Cost of production
Being a virtual currency, people mistakenly think that there is no cost needed to produce bitcoins, but they are wrong. The most significant sector that consumes the production cost is electricity. Secondly, the bitcoin miners that are out are computing and calculating the sectors related to production. The number of bitcoins that are to be created also needs to be paid and come under the cost of production for bitcoin. The first miner to solve these problems gets an incredible reward lock of newly minted bitcoins.
The interesting fact about bitcoin production that makes it different from other produced goods is that deep production algorithms allow only one Block to be paid at a time, which means that, on average, one block can be made every 10 minutes. Hence all the problem-solvers are just there to increase the difficulty of these problems to extract bitcoin, and this is done only to preserve that 10-minute interval.
Availability on currency exchanges
As NYSE, Nasdaq, and the FTSE are used by stock investors; likewise, crypto investors use Coinbase, GDAX, and other cryptocurrency exchanges. Like traditional currencies, bitcoin also needs virtual platforms that let the investors trade cryptocurrencies.
As the new exchange system gains popularity, it draws the attention of more and more participants and creates a more extensive network, which helps the investors by having more and more options and people to deal with. Being the most significant cryptocurrency bitcoins presence on these exchanges affects regulatory compliance on the other cryptocurrencies.
Missions and legal matters
The fast growth in the popularity of bitcoin and other cryptos has forced the regulators to discuss how to classify these digital assets. Like the securities and exchange commission classifies cryptocurrencies as securities, the US, Commodity futures trading commission thinks of bitcoin as a commodity.
Various financial products like ETFs, future, and other derivatives use bitcoin as their underlying asset. This impacts the prices in two different ways. The primary feature is that it allows investors who are not capable enough to purchase an actual bitcoin to invest in bitcoin, hence increasing the demand for bitcoin. It reduces the price volatility by letting institutions who believe bitcoin futures are overvalued or undervalued use the substantial resources that let them make bets that bitcoins price will fall.
Forks and governance stability
Since bitcoin is a decentralized currency, it relies on the miners and developers to take care of the transactions and secure the Blockchain. A particular pain point has been the issue of scalability. The size of blogs decides the number of transactions that can’t happen, and bitcoin software is recently not able to process more than three transactions per second.