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How is the data collected to determine Bitcoin's value? And who determines the exchange value of Bitcoin in USD?

This question isn't really answered, no matter how much I research. I want to know the evaluation process of Bitcoin. If possible can someone go as much detail as they think necessary. I understand the mechanisms of Bitcoin: generation, exchange and the what not, but never really understood how or whom values Bitcoin.

I understand that currency is evaluated by demand and supply but how is the demand and supply gauged and who does this seemingly impossible task? Because, you know, Bitcoin is supposed to be unregulated and free.

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  • Hi SydneyGuy, welcome to Bitcoin.SE. I'm sure you'll get a few answers here quickly, but you might be interested to also check out other questions tagged with the tags on your question to find more related questions, such as e.g. What is the Bitcoin spot price and how is it calculated?.
    – Murch ♦
    Commented May 12, 2015 at 9:32
  • You could also take a look at bitcoin.stackexchange.com/questions/36835/…
    – Mr Jones
    Commented May 12, 2015 at 13:25
  • Who determines the exchange value between USD and EUR? Check any bitcoin exchange website and you'll see an order book and the website determines the price. It might be different in different exchanges as well.
    – abeikverdi
    Commented May 13, 2015 at 4:53

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The exchange rate of BTC/USD is discovered by market participants through offering to sell and buy bitcoins for USD. The current rate is just the latest price from when a buyer and seller agreed on a trade.

Exchanges don't set prices, but offer a platform that keeps track of buy and sell orders to facilitate trading. Therefore, in a way, they collect the data and communicate the price, while (in an ideal world) not influencing the price themselves.

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The Bitcoin / USD exchange rate is determined by users of an exchange. Traders in an exchange can buy/sell at however much they'd like, but if you sell BTC to USD at too high a rate, or buy BTC with USD at too low a rate, your transaction is less likely to occur.

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    "determined by an exchange" doesn't quite sound right. Perhaps it rather should be "determined on exchanges" i.e. not by the exchanges but on their platform.
    – Murch ♦
    Commented May 12, 2015 at 9:30
  • @Murch: Yes, it's the users of the exchange who determine it, not the exchange itself.
    – Geremia
    Commented May 12, 2015 at 18:50

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