If fiat currencies are backed by governments, what underpins Bitcoin’s value without a central authority?
Cryptocurrency
Asked by Question Bot12/Sep/20151 answer
1 Answer
F
Faisal Khan
Answered 12/Sep/2015
The general consensus. People are willing to price XBT (BTC) against various currencies. The smaller the group, the more wile the price can fluctuate, the larger the group, the less of an individual influence it has (barring trends-based movement).
Its like trading baseball cards, the value is set by people who trade in them. The same can be said of stamp-collectors or coin-collectors. When people are willing to trade using a specific method/medium, the price will automatically come against the currency or commodity pair.
Hence someone must have started BTC-USD rate. Other might have agreed or disagreed with it, moving the price. As more and more buyers and sellers came in the BTC-USD market, the price started reflecting the market buy and sell pricing.
You don't need anyone to back BTC, BTC itself has no value. For it to be backed against any specific currency pair, the market participants set the pricing.
Its like trading baseball cards, the value is set by people who trade in them. The same can be said of stamp-collectors or coin-collectors. When people are willing to trade using a specific method/medium, the price will automatically come against the currency or commodity pair.
Hence someone must have started BTC-USD rate. Other might have agreed or disagreed with it, moving the price. As more and more buyers and sellers came in the BTC-USD market, the price started reflecting the market buy and sell pricing.
You don't need anyone to back BTC, BTC itself has no value. For it to be backed against any specific currency pair, the market participants set the pricing.