THIS IS WHAT DETERMINES THE PRICE OF BITCOIN [View all]

[pbmus]

Just like a hiker hoofing up and down across a jagged mountain range, anyone who follows the price of Bitcoin is probably getting pretty tired. From a high of over $19,000 in December of last year to around $10,000 today, the price has been changing so quickly that any news coverage of it is quickly out of date.

As if the wild changes weren’t enough, the price can even vary slightly depending on where you look for it. Here’s what generates those crazy prices, and the small differences between them, that you might see the next time you shop for cryptocurrencies.

It’s about price discovery

The price at any moment is a natural result of the trading that happens on cryptocurrency exchanges in a process called price discovery. For example, consider Coinbase.com— a popular hub, or brokerage, for people who want to buy or sell Bitcoin. If you purchase there, the entity selling you the cryptocurrency is actually Coinbase itself. Coinbase.com has a sister site, called GDAX, which stands for Global Digital Asset Exchange—that’s a marketplace for professional traders and institutions, and that’s where the price discovery happens. The price of the last trade on GDAX is the value of Bitcoin there at the moment, and that’s also the basis for the price you see on Coinbase.com. (Check in the upper left corner here on GDAX to see the last trade.)

https://www.popsci.com/amp/bitcoin-price?