Who Controls Cryptocurrency

Every cryptocurrency in the crypto market has a different price. But who controls this price? Who controls cryptocurrency in general? If you have these queries in mind, read along.

Developer & Miners

If you consider the safety and technology, cryptocurrencies are controlled by developers and miners. It’s the developers who ensure that the transactions happen as they’re supposed to happen. Also, they ensure the best software is in place.

Earlier, when there wasn’t much demand for Bitcoin, the platform supported three transactions per second. However, with the increase in demand, the issue needs to be solved. And this is what developers take care of. Also, the miners ensure that cryptocurrencies are being regularly produced to meet the demands.

Now, let’s focus on the pricing factors:

Supply & Demand

Let’s take the example of a commodity. For instance, a company is producing 50 oil barrels per month. And this supply is enough as per the present consumption. However, a few months later, the demand increases to, let’s say, 150 oil barrels per month. Now, if the company is unable to meet the demands, there’ll be a limited supply of oil, increasing the price of the commodity.

The same is the case with cryptocurrencies like Bitcoin. Miners are solving math problems to produce more Bitcoins. However, the rate has slowed in the past few years. It’s because of halved rewards, high energy consumption, and a scenario like the one mentioned above can happen in this case too if the demand increases rapidly.

Competition

Competition is yet another factor that controls cryptocurrency prices. Whenever we talk about cryptocurrency, Bitcoin is what comes to our mind instantly. However, there exist altcoins like Ethereum, Ripple, Tether, Binance coin, etc.

Such competitors somehow help in lowering the price of the currency. However, the visibility and a widespread community give Bitcoin an edge over its competitors. 

Production Expenses

Miners solve complex mathematical problems by competing with each other. The first one to solve the problem is rewarded and issued with a block of bitcoins. Now, mining requires electricity which significantly adds to the production expenses.

And as more miners try to solve the problems, they become complex and thus needing more electricity. So, more are the production expenses costlier will be the currency.