The Bitcoin Price

In my previous post, Buying Bitcoins, I wasn't actually able to buy anything. I initiated a transfer from my bank to an online bitcoin account. A few days later the transfer completed and I exchanged my Euros for a fraction of a bitcoin. The price, which I didn't note, was something like 206 Euros per bitcoin.

How was that price determined? I'm not sure because I couldn't find an explanation of the pricing mechanism. Since the value of anything is whatever people are willing to pay for it, I imagine there are bitcoin traders scattered throughout the world exchanging their hard-earned bitcoins for various national currencies. These people -- maybe they are robots -- are setting the price.

Here is a chart of bitcoin prices since December 2012. The peak was $1145 on 30 November 2013. It's been a long downhill slide since then.

coinbase.com/charts

I'll continue to research the pricing mechanism and will report any findings in a future post.