It is contingent upon the volume of transactions. In stock market, the liquidity of a stock depends upon factors like value of the business, free float, demand and supply, etc.. In case of Bitcoin, it seems free float and need are the aspects that determine its price. The high volatility of Bitcoin price is because of less free float and much more need. The value of this digital company is dependent upon their members’ encounters with Bitcoin transactions. We may get some useful feedback from its members.No members can sell Bitcoin if they don’t have one. It means you have to first get it by tendering something precious you have or through Bitcoin mining.
What Could Be One Big Issue With This Method of Transaction?
A huge chunk of these precious things finally goes to a person who’s the original seller of Bitcoin. Of course, a certain amount as gain will certainly go to other members that are not the original producer of Bitcoins. Some members will also lose their valuables. As demand for Bitcoin increases, the original seller may produce more Bitcoins as is being done by central banks. Since the purchase price of Bitcoin increases in their market, the original manufacturers can slowly release their bitcoins into the system and make a huge profit.
Bitcoin Is a Private Virtual Financial Instrument That Is Not Controlled
Bitcoin is a digital financial instrument, even though it does not qualify to be a full-time money, nor does it have legal sanctity. If Bitcoin holders set up private tribunal to settle their issues arising out of Bitcoin transactions then they may not worry about legal sanctity. Therefore, it is a private virtual financial instrument for an exclusive set of individuals. People who have Bitcoins are going to be able to buy massive quantities of goods and services in the public domain, which can destabilize the normal market.
This is going to be a challenge to the authorities. The inaction of regulators can make another financial crisis as it had happened during the financial crisis of 2007-08. As usual, we can’t judge the tip of the iceberg. We will not be able to predict the damage it could produce. It’s only in the last stage we see the entire thing, when we are incapable of doing anything except an emergency exit to endure the catastrophe. This, we’ve been experiencing since we began experimenting on things which we desired to have control over. We succeeded in a few and neglected in many though not without sacrifice and loss. Should we wait until we see the whole thing?