STEEM CRYPTO CHALLENGE MONTH #5: HOW GOVERNMENT REGULATIONS, EXCHANGES AND INTERNAL GOVERNANCE ALTERS BITCOIN PRICE
Hi, everyone, I’m glad to be back after two years. I know I have missed a lot. Thanks to my friend, @rube223 for reminding me to come back.
On the challenge today, I’m going to dwell on the price of bitcoin as it is affected by government regulations, trading exchange platforms and bitcoin internal governance.
Please join me and don’t forget to add your contributions on the comment section.
Government Regulations
Bitcoin has gained tremendous popularity over the years and with the influx of more cryptocurrencies, it has become a major concern among governments of different nations on how to classify it and regulate its use within their borders.
The US Commodity Futures Trading Commission (CFTC) considers bitcoin to be a commodity, while Securities and Exchange Commission (SEC) regards it as securities.
This uncertainty has put different governments oo hold as they look as each other to come up with appropriate regulations for bitcoin usage, despite the surging market capitalization of the asset.
Besides, the bitcoin market has witnessed different rollout of products in which bitcoin is used as underlying asset, example, futures, echange traded fundes (ETFs), among other derivatives.
How does this affect the price of the asset?
First: It reduces price volatility, by allowing investors that look at bitcoin futures as being overvalued or undervalued, to bet on bitcoin, using their substantial resources.
Second: it provides investors with an indirect access to bitcoin, though they can not buy actual bitcoin and in that way, demand for the asset is skyrocketed.
Bitcoin Availability on Currency Exchanges
Just as investors/traders trade on foreign exchange, cryptocurrency exchange platforms like Binance, LocalBitcoins, Bittrex, among others also offer traders the level ground to trade with bitcoin pairs like BTC/USDT, ETH/BTC, among others.
The popularity of the exchange has a direct effect on the number of traders willing to use it, hence the price of bitcoin as demand for more assets increases.
Forks and Government Stability
There is no central government authority in charge of bitcoin. Thus, it relies on developers and miners, who process transactions on the blockchain and keeps it secured.
Any changes in software is driven on consensus and this is the major frustration in the blockchain, since fundamental issues usually take time to resolve.
Based on this, the issue of scalability has been a major pain to handle. This is because the number of transactions depends on the size of blocks.
With approximately 3 block processing per second and the growing demand, the supply can not match the market demand.
This has put some threats on BTC, as investors might turn to alternative competing cryptocurrencies in the market.
In conclusion, these factors has been and will continue to be the reason for the price volatility of Bitcoin.
Thank you for reading.
The price of Bitcoin (BTC) will be 12345.67 USD