Even though it is considered a cryptocurrency, but in some countries, bitcoin is recognized as a legal currency and can be used for the transaction. People can purchase and exchange bitcoin from investors. Meanwhile, investors get bitcoin through cryptocurrency exchanges. On the first creation, bitcoin has no value because it is not for sale. But when it went to the first currency exchanges, the value of bitcoin began to appear. So, what is exactly the bitcoin exchange, and how much Bitcoin Exchange Rate is?
What is Bitcoin Exchange?
Bitcoin exchange is a digital platform or marketplace where traders meet to sell and buy bitcoin using cryptocurrency or paper money. It serves as an intermediary between sellers and buyers of many types of cryptocurrency. Traders can sell or buy bitcoin by putting limit order or market order. Once the market order is made, the trader puts the trading exchange coins for the price on the marketplace. After the limit order, the trader will direct the exchange platform to set the price for lower or higher from the bid. The Bitcoin Exchange Rate depends on whether the trader selling or buying bitcoin.
Before able to make the transaction, users should make an account on the exchange and go through several security verifications. When the account is done and identification is completed, users should transfer funds before they buy or sell bitcoin.
Price of Bitcoin
The Bitcoin Exchange Rate does not determine by anyone, but the market sets the price of bitcoin. Since there is no particular authority to control the bitcoin rate, the price of this cryptocurrency becomes complex since many factors may affect the price. Also, different exchange platforms may have different bitcoin prices based on their database. Bitcoin is traded in various exchange platforms with its prices at the given time. So, it is not strange if you find the bitcoin rate may cheaper or higher on one platform and another.
Due to the ability to sell and buy quickly, it can be hard to set the exact price of bitcoin. However, many events in real life may affect the bitcoin rate. For example, if there is large country or government cannot regulate bitcoin, then the news makes the bitcoin rate fall. The factors that influence bitcoin prices vary. The rapid fluctuation of the bitcoin rate makes traders should have precautions when the price suddenly falls below market value.
Bitcoin is not regulated by certain organizations or authorities. This means that the bitcoin exchange can be operated even when it is not operated by the central power. Bitcoin exchange allows peer-to-peer bitcoin trading through the exchange platform directly. This type of exchange is known as a decentralized exchange.
Many people think this system is better than the conventional money transaction because decentralized exchange requires less to no personal information. The direct process of exchange also reduces the risk of fraud, theft, manipulation, and also hacks from the third party. Even though the decentralized exchange is mostly used for cryptocurrency exchange but it is important to be cautious. Fraud and manipulation still shadow bitcoin exchange, so users should be aware of that are bound to happen, there is no authority to provide recourse for the victim.