Yes, supply and demand I know. But what literal thing is determining the price. When I see the price changing every second on Coinbase or Robinhood, what is controlling that. Is it an algorithm? What information does that algorithm take in? Is it just one algorithm determining this price, or are there different algorithms and it’s just an estimation? I have never found an answer to these questions. What I want to know is what physical place is an app like Coinbase getting this changing price from.
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Does one of these three perhaps answer your question? Is there some way to estimate the proper value of one Bitcoin?, How is the exchange rate for Bitcoin established?, Where do bitcoins come from and what gives them their value?– Murch ♦Jan 25, 2021 at 18:11
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1 Answer
The "current Bitcoin price" from an exchange like Coinbase is simply the last price at which a buyer and seller agreed to trade Bitcoin at that exchange, also known as the "last price". Every time a new trade takes place on that exchange, the price is updated.
The current price from sites that aren't exchanges themselves, like Robinhood or Preev, are generally taken as the averages of the prices of all of the exchanges they connect to. Sometimes these averages are weighted, so that the price from exchanges with higher trade volume is weighted more heavily than the price from a very small exchange.
