Why Bitcoin Price Keep Rising? Bitcoin Explained 2024

Bitcoin has emerged as a most exciting topic among investors and the finance industry. With every wave of price uptrend, Bitcoin marks headlines on finance and economic news sources. But more than just an investment option, Bitcoin has transformed our thinking about money and transactions from the ground. All these aspects have made understanding Bitcoin more crucial in 2024 with its increasing relevance in financial markets and everyday life.

In this article, we will explore what Bitcoin is, what are the reasons behind its rising price, and insights into investing in this new digital asset.

What is Bitcoin? A Simple Explanation for Beginners

In simpler terms, Bitcoin is a digital currency or often referred to as a cryptocurrency. Unlike traditional currencies such as USD or YEN – which are issued by governments, Bitcoin is not created or managed by any single person or entity. Anyone on the planet can buy Bitcoin from secondary markets. Think of Bitcoin as Gold but it is digital. 

Bitcoin operates on a decentralized network, also called Blockchain. You would require a special digital wallet to store Bitcoin. These wallets are created on blockchain and each are assigned with a unique address. All these characteristics make Bitcoin unique and appealing to many.

So whenever Bitcoin needs to be moved, it is sent from one wallet to another wallet via a transaction. Everytime a Bitcoin transaction takes place, it is recorded on the blockchain database. But if you want to invest in Bitcoin, you will not necessarily require a wallet or any such technical information! Why? We will explain it in this blog further below. 

Some facts about Bitcoin

Bitcoin has fixed supply
As a currency, Bitcoin has a fixed supply of 21,000,000 or 21 million. There will neve be more Bitcoin than 21 million in the system. 
Bitcoin can be fractionalized
You can send or receive even 0.001 fraction of Bitcoin. 
Difference: BTC and Bitcon
BTC is the symbol for Bitcoin cryptocurrency – just like how USD is used for US Dollar. When you want to address Bitcoin as currency, you can refer to it as BTC. 

Bitcoin’s Origin and Creation

Bitcoin was created in 2009 by Satoshi Nakamoto, although no one knows if this is the name for a single person or a group. The primary motivation behind its creation was to enable a peer-to-peer transaction system without any intermediaries like banks. As per the Bitcoin whitepaper, this system eliminates the need for any central authority and allows for greater financial freedom.

How Bitcoin Functions

There are two fundamental concepts that make Bitcoin work:

Blockchain: Think of blockchain as a digital ledger that records all transactions in chronological order. Each transaction is grouped into blocks, which are linked together to form a chain. Once a block is broadcasted on the blockchain, the transaction data within it can not be changed. This ensures transparency and security, as anyone can see blockchain data and verify transactions at any time.

Proof of Work: This is the mechanism used to confirm transactions and add them to the blockchain. It's a more technical concept than Bitcoin itself so if you want to dive deeper and read it all, consider reading this article: What is Proof-of-Work (PoW).

In simple terms, we can explain that Proof-of-Work is a mechanism that involves Bitcoin transaction processing and adding it to the blockchain. This process is also called Bitcoin Mining as the system releases new Bitcoin every time a block is generated.  

So as we have now understood what Bitcoin is, let’s move to the grasp on how Bitcoin price goes up, by the way it falls down too! 

Why Bitcoin Price Go Up?

The movements in Bitcoin price often leave many scratching their heads, especially with its notorious volatility. Understanding why the Bitcoin price goes up or down involves examining several key factors that shape its market performance.

1. Market Adoption

Market adoption significantly influences Bitcoin's price by driving increased demand. As more individuals, businesses, and institutions begin to use and invest in Bitcoin, its demand rises in the secondary markets. Whether people view Bitcoin as an investment option or companies accept it as payment, this widespread adoption adds substantial buying pressure for Bitcoin. 

With more people buying Bitcoin, its fixed supply becomes less accessible furthermore. The capped supply of 21 million Bitcoin further exacerbates this effect, as rising demand against a limited supply naturally leads to higher prices. 

2. Economic Factors

Economic uncertainty often drives investors to seek alternative assets so that they can diversify their portfolio. With Bitcoin having given rich returns in a shorter time compared to other assets, it emerges as a popular choice. 

When faced with inflation, currency devaluation, or market volatility, investors tend to look for hedges to protect their wealth. Bitcoin is seen as a safeguard against these risks. Moreover, its decentralized nature and limited supply make it an attractive option for those looking to preserve value during times of economic distress.

3. Network Effects

Bitcoin benefits from the network effect, where its value grows as more people use it. This creates a positive feedback loop: as Bitcoin's price increases, it attracts more attention, leading to further adoption and even higher prices. 

Additionally, in times of economic uncertainty or inflation, Bitcoin's role as a hedge against traditional currency risks becomes more attractive, further boosting its adoption. Technological advancements and ecosystem growth also make Bitcoin more accessible, further encouraging wider use and driving its price uptrend.

Investing in Bitcoin

Investing in Bitcoin can seem like a thrilling adventure, especially with its potential for high returns. As said earlier in this blog that you do not necessarily require a crypto wallet or technical understanding of blockchain to buy Bitcoin, here’s is the simpler method of buying Bitcoin in 2024; 

How to Buy Bitcoin in 2024

Buying Bitcoin is an easier process than you might think. Here’s a simple step-by-step guide:

1. Choose a cryptocurrency exchange: Cryptocurrency exchanges are platforms from where you can buy Bitcoin and other cryptocurrencies. Coinbase, Binance and ByBit are popular choices for purchasing Bitcoin online. These exchanges act as brokers and give you a wallet to buy and store Bitcoin. Choose a cryptocurrency exchange based on your country and which allows you to deposit currency of your choice like USD, YEN or GBP. 

2. Create an Account: After selecting the exchange, complete the signup process and upload necessary documents for identity verification.

3. Deposit Funds: Once you have successfully completed account verification, add funds to your exchange wallet using a card to or by bank deposits. 

4. Buy Bitcoin: Now navigate to the market section of the crypto exchange application, and buy Bitcoin with the amount you wish to invest. After the purchase, you will be able to see your Bitcoin balance in the wallet. 

Conclusion

As we approach 2024, keeping an eye on market developments becomes crucial for anyone interested in the future of Bitcoin. Understanding changes in regulatory landscapes, institutional interest, and macroeconomic factors will help you navigate this dynamic market.

Stay educated: Follow news sources focused on cryptocurrency.

Engage with the community: Participate in forums and discussions to gain insights.

Diversify knowledge: Familiarize yourself with various aspects of Bitcoin through guides like this blog. Awareness will empower your investment choices in the evolving world of Bitcoin.

FAQs (Frequently Asked Questions)

What is Bitcoin and why is it important to understand it in 2024?

Bitcoin is a decentralized digital currency created by Satoshi Nakamoto. It operates on blockchain technology and utilizes Proof of Work for transaction validation. Understanding Bitcoin in 2024 is crucial due to its rising price trends and increasing adoption among institutional investors, which could impact financial markets significantly.

How does the price of Bitcoin fluctuate?

Bitcoin's price fluctuates due to various factors including market performance, regulatory developments, and institutional adoption. Historical price trends leading up to 2024 show significant volatility influenced by investor sentiment and macroeconomic conditions.

What role do regulatory developments play in Bitcoin's market sentiment?

Regulatory changes can greatly influence investor confidence in Bitcoin. For instance, the approval of ETFs in the U.S. has been significant for Bitcoin's price, as regulations shape investment strategies and overall market sentiment.

How does adoption affect Bitcoin prices?

Adoption involves massive user-base and major companies investing in Bitcoin, which drives demand and can lead to price increases. Examples include companies like Tesla that have embraced Bitcoin, contributing to a growing interest among investors.

What should new investors consider before investing in Bitcoin?

New investors should weigh the potential rewards against risks such as volatility and regulatory uncertainties. It's essential to research how to buy and store Bitcoin safely through reputable exchanges and secure digital wallets.