The price of Bitcoin is a balance between what price someone is willing to trade with to part from the Bitcoin and what someone is ready to pay to acquire it.
In a simpler scenario between two people, where I’m trying to buy a house from, say Alex. I’d be looking to buy the house at the cheapest price that I can get and Alex would be looking to sell the house at the highest price that he could get.
Of Course, this transaction cannot happen if both of us stand our ground and refuse to come to an agreement. Say, this transaction is similar to majority of the transactions where I can afford to buy the house for a certain sum and no more than that, and Alex certainly does have a figure in mind below which he wouldn’t be willing to sell his house.
These are called upper and lower limits of what could be the value of the house in question. Once we have a clear picture of our upper and lower limits for this transaction, we can much easily decide on a price for the house that’s between our upper and lower limits of what we’re pricing the house at.
This is an example of how a transaction takes place between two people that come together to trade a house in exchange for a certain sum of money.
Now, Imagine a scenario with Millions bidding for the same house and then a Billion and then some more.
When we have so many people bidding for a commodity through a platform, the company in question prices the value of the commodity between what one is ready to pay to acquire it and the price at which the person in possession of the commodity is willing to sell it for.
In a transaction involving a house, there normally is a broker that acts accordingly to bring about this balance within which people are willing to trade.
A company acts as a price regulator to bring about a transaction between two people with commodities that they are willing to trade with a common interest to profit by taking a percentage of the transaction usually from the receiver, but in this scenario that involves Bitcoin, the sender usually pays a fee to the third party company.
