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How Bitcoin Mining Works: an A-Z Guide

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No matter the price fluctuations and uncertainty surrounding Bitcoin, the Bitcoin rates of popularity are still high. After the sensational rise of its price to over $25,000 last winter, BTC now costs less than 30% of that peak price. The current Bitcoin value is estimated at around $6,700, and some skeptics may claim that its cocky moment has passed, and the cryptocurrency has already done what it could, with no chances to regain its price. But is that really so? Hard to tell, since a half of experts shout from all housetops that Bitcoin price will continue shrinking, while another half assure the global crypto-society that the value of one Bitcoin is going to soar any day now.

Telling that one camp is right and the other one is totally wrong would be incompetent, since they both are guided by some expert observations, cryptocurrency analysis, and estimates based on the objective financial trends and events. So, why is Bitcoin going up, and what may cause it to fall? Let’s consider the arguments of both parties to see which one is closer to today’s reality, and what events and changes to look out for to make sure that your Bitcoin investment is out of risk.

Bitcoin Price History

Those who wish to invest in Bitcoin should first learn the Bitcoin value trend, as the past may shed light on the future pricing of this coin. Here we offer the major highlights from its value and dynamics since it emerged in 2009 and until today. Experts recognize four distinct ‘eras’ in the Bitcoin price since 2009:

  • The first one includes the 2009-2013 start of Bitcoin popularity.
  • The second era took place in 2013-2014, characterized by the collapse of Bitcoin from over one thousand dollars to less than $300. Many people lost faith in Bitcoin then and grew skeptical about its value.
  • Following that period, in 2014-2016, traders focused on alternative cryptocoins such as Ethereum, Litecoin, etc.
  • In late 2017, Bitcoin’s popularity peaked, with the Bitcoin highest value rising over $20,000 in December, and the Bitcoin total value exceeding $750 billion.
  • Starting from early 2018, the Bitcoin market corrected again, with the price of this coin falling unexpectedly and abruptly to $8,000 and continuing a gradual decline to today’s $6,600 in the forthcoming months.

As one can see, Bitcoin price last 5 years has been witnessing immense fluctuations, with some periods of super-popularity and others – of a total crash. So, it’s not clear what is expecting Bitcoin in the next couple of months of years. It all depends on a range of outside factors we consider further.

Is Bitcoin Value Going to Restore?

The truth is that the Bitcoin future price may rise, or may fall – that’s a 50/50 chance, after all. But what you believe in depends on what data and statistics you rely on. For instance, if you believe in simulations based on the past Bitcoin price trends, you will see that models projecting the rise of its value over $10,000 are larger in number than the models predicting its price reduction. This means that the likelihood of Bitcoin’s price rise is higher than the likelihood of its decrease.

What’s the best validation of Bitcoin price predictions? We strongly believe that mighty financial institutions and leaders in the financial market know much more than laypersons do, so the best way to stay tuned to the anticipated cryptocurrency rate changes is to monitor their actions and decisions. They may give you a hint of what’s going to happen. Look, for instance, at these randomly collected but meaningful events of the past few months:

  • Buy orders and arbitrage cryptocurrency operations with Bitcoin are on the rise – the trend that was observed in early 2017, at the time when BTC cost only around $1,000. We all know what this quickly led to – a price over $20,000.
  • An important factor in the BTC price’s change is the investor confidence. Though in April 2018, the price already exceeded $9,000 and experts were expecting a further increase to $10,000 regarded as a bull price in the market, this did not happen. So, maybe the new price explosion will happen later this year? As soon as BTC gains the bull price, the market confidence is expected to drive its value further on, which will make the price rise independent from other events in the financial market.

As a result of analyzing these factors, one can see that the value of Bitcoin today is a rather low point in its overall potential. Experts are confident that the success story of Bitcoin is far from finished, and there’s so much more for the cryptocurrency to give to its possessors. But to gain stronger confidence about this trend, we need to understand why Bitcoin generally falls to watch out.

What Does the Price of Bitcoin Depend On?

So, Bitcoin cost a fortune, over $25,000, at the end of 2017, and something went totally wrong at the start of 2018, with BTC losing over 70% of its value within months. Why is Bitcoin falling? Here, a couple of strong factors play a major role:

  • The threat of regulations. Numerous financial institutions have repeatedly promised the imposition of certain regulations on Bitcoin, which is not in the traders’ best interest. At present, Bitcoin transactions are totally private, and you have no opportunity to trace their holder even if you try hard. Though such privacy is often blamed for the secret financing of terrorism and crime, investors are not ready to part with that privilege mainly due to tax evasion it allows. So, the news about looming regulations always precedes a fall in the Bitcoin price.

  • Google’s ban on Bitcoin. Another factor that caused the Bitcoin value to fall this summer was the news from Google about its ban on all operations with BTC. Since Google is a giant in the hi-tech industry today, its decisions of this kind inevitably cause serious fluctuations in the BTC pricing.

  • A rise of altcoins. At the times when Bitcoin was a single popular cryptocurrency, it was definitely a hit. Now that Ethereum, Ripple, and a dozen of other cryptocoins gain popularity and rise in value, Bitcoin has to compete with them for investors, which also reduces its value to a certain extent.

With factors of Bitcoin price reduction now understood, we need to take a closer look at factors that determine its ups and downs. This may help small- and medium-size investors to assess the situation in the cryptocurrency exchange more objectively, and to make wise decisions as to whether to part with their hard-earned coins or to keep them patiently till better days.

  • The cryptocurrency market requires solid regulations, which may protect customers from dramatic losses (similar to those in early 2018, with BTC losing over $10,000 in value within just a couple of months). Though some experts believe that such regulations may restrain BTC growth, others are confident that an opposite trend will be observed, given the greater consumer confidence and healthier market processes.

  • Projections of significant personas in the cryptomarket are also a certain boost for the cryptocurrency’s potential, since when a BTC billionaire says that he’s confident in Bitcoin, you also start to believe. Assurance of the BTC price increase came from Alistair Milne projecting the value of a Bitcoin at 35-60 thousand dollars by 2020, while a world-known investor Tim Draper went even further to envision the BTC price to reach the mind-cracking $250,000 by 2022. To believe them or not, it’s definitely your choice. But if many rich people say that they are confident in their assets, this may come as additional reassurance for you as well.

Now, with all the necessary knowledge of why Bitcoin falls and what may cause it to rise, let’s see from which point we have to start in making our price predictions. What’s the current situation around BTC, and what does it tell us in terms of what to expect from the coin in the near future?

Value of Bitcoin Now: Example of the UK

If you are interested in buying the Bitcoin now, check the price of 1 bitcoin with the help of an online calculator. The current Bitcoin value in pounds is £5,168, but the situation changes every minute, so make sure you always possess the latest estimates before making an actual purchase. It’s better to check the Bitcoin price to GBP at UK crypto-exchanges, since here you will not have to pay any extra fees for the currency exchange. Thus, you may get the best price (consider XE or CoinGecko).

So, while the potential value of Bitcoin is indeed high, the realistic estimate of the Bitcoin future value is impossible at present, with prices going up and down every day. If you consider this coin as a potential source of a lucrative investment, make sure you check the Bitcoin price charts and make wise investment decisions. Don’t invest all your money at once; wait and observe the market. In this way, you will have greater chances for seeing a real ROI.

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