New to bit coin use. I have noticed over the past few months that the exchange rate has ballooned from 13 to now 22 $ a coin, this presents a problem, prices are almost never adjusted to account for the massive inflation; how is the rate set and are there ways of getting bit coins (I use spendbitcoins.com) are a fairer rate. I would also like to say that if inflation on the coins continues to rise it will put a lot of market places out of business.

  • "how is the rate set" Supply and demand. "are there ways of getting bit coins" Yes. By the way, signatures are discouraged on StackExchange. – Nick ODell Feb 9 '13 at 0:17

The rate is set by supply and demand. If there are buyers willing to pay $25, and sellers selling for $25.25+, Then eventually someone will either buy at $25.25, or sell at $25, which then moves the price. This current price movement is due to speculation. People are buying and holding coins, and there are far more buyers than sellers. So naturally the price will continue moving up.

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