Why The Value Of Digital Currencies Rise And Fall - YouTube

Hey guys and girls.

Welcome back to the Bitcoin series, where I try to find a way to make a passive income

through digital currency mining.

My name is Jake Owens, and this is Millionaire Mindset Hub.

In this episode, we take a look at why the value of digital currencies rise and fall.

Alright, let's get into it.

There was a term I used a lot a few episodes ago which is called "What Is A Current Exchange

(And How Does It Work?)" if you haven't seen that episode I recommend you pause this video

now, go and watch it, the link is in the description box below, then come back and watch this video.

Alright, is everyone back?

Great.

The term I used a ton in that video was supply and demand which is the entire reason digital

currency prices rise and fall depending on the supply of the currency and the demand

from the market.

In this video, I'm going to be using Bitcoin as the example however these concepts can

be applied to any currency, traditional or cryptocurrency.

Essentially, at any one time there is a definitive amount of coins in the marketplace. Therefore,

because it's not unlimited this creates scarcity because it's not possible for everyone to

own as many Bitcoins as they want.

Due to the scarcity, it creates a competitive marketplace. Essentially, an auction where

you must outfit everyone else in the marketplace to obtain each Bitcoin that you'd like to

buy.

Now, to completely understand this, let's look at this by using simple mathematics.

Let's say that there were 100 Bitcoins in the marketplace. And on the first day of opening

there were 20 people who wanted to purchase one Bitcoin each.

Because there was an abundance of coins compared to the demand of people wanting the coins

on that first day there was virtually no auction as there was no need to outbid each other

to purchase the currency as there were so many. So, they all got Bitcoins for $1 each.

The second day, 80 Bitcoins and again only 20 people who wanted to buy Bitcoin. So, they

each got one Bitcoin for $1 each.

The same thing happened on the third, fourth and fifth day.

On the sixth day, one of the people who purchased Bitcoin realised that he didn't want it anymore

and would rather sell it to purchase something else.

So, on the sixth day he put it on to the market to sell. And on that same day, 20 people happened

to be in the market wanting to purchase one Bitcoin each. However, unlike the last 100

people, unless 20 are willing to sell their coins, they all can't have a Bitcoin on the

sixth day because the last 100 people bought all of the Bitcoins in the market.

So, they each have two choices. To come back another day when more Bitcoins might be available,

or outbid the others who want to purchase the one Bitcoin on offer in the marketplace.

And so, the auction begins.

Person 1 bids one dollar because he feels like he shouldn't have to pay any more than

the other 100 people did who were able to buy Bitcoin before him. But person 2 doesn't

feel the same way, so he bids $1.20 for the one Bitcoin. Person 3 bids $1.40, all the

way up to person 15 who by this time five people dropped out of the auction before it

even began. And the price of Bitcoin now reached $3.80 and the person who sold the Bitcoin

made a $2.80 profit after everyone but one person dropped out of the auction.

Then, on the seventh day the original 19 people who did receive Bitcoin the previous day and

a following 20 people came to the marketplace looking for Bitcoin. And it just so happens

that someone heard about the profit the last person who sold Bitcoin made so they themselves

put their Bitcoin on the market. And on that day, they made $7 revenue with a $6 profit

which was $3.20 higher than yesterdays profit because the market was higher on this day

consisting of 29 people but the supply stayed the same at 1 Bitcoin.

Now, translate that exact same concept millions of people around the globe who want to purchase

a limited supply of Bitcoins. Because there aren't enough Bitcoins to go around for everyone

who wants one, therefore as the demand continues to increase and the supply gets smaller and

smaller the price will increase as Bitcoin becomes more and more popular allowing it

to reach new heights such as on June 11th 2017 where it hit $3000 per Bitcoin.

This is also applied vice versa. Where if the supply is greater than the demand the

price will fall or remain at a low amount because everyone would get the amount of Bitcoins

they want without the need to bid over anyone else.

That is the essence of supply and demand. When there is supply and little demand prices

are low, when there is great demand but little supply the prices increase.

Hey guys and girls.

Thanks for watching! :D

I really hope you enjoyed this video and it answered all of your questions on why digital

currency prices rise and fall.

If this video provided you with any value, and you feel that way inclined please feel

free to hit that subscribe button and like the video.

If you have any questions at all or just want to reach out and say "Hi!" please feel free

to do so in the comment section below or just simply PM me :)

Again, thanks a ton for watching!

I look forward to seeing you in the next episode.

Cheers :-)