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Why is the price of Bitcoin different around the world?
A Google search at the time of writing suggests that the price of a single Bitcoin is over 13,000 USD. While much of the news surrounding bitcoin over the past year has been about the huge gains, there has been less discussion about the calculation of the value itselfand specifically how Google (or any other source, for that matter) determined the value of a bitcoin. Do a search on multiple cryptocurrency exchanges around the world at exactly the same time, and you’ll likely find slightly different values for a single bitcoin. Why does the price of bitcoin vary depending on where you look?
No standard price
The main explanation for the discrepancies in the price of bitcoin between different exchanges is the fact that, as a decentralized digital currency, there is no standard or global price of bitcoin at any given time. It is not pegged to the USD or any other fiat currency, nor is it tied to a specific country or exchange. As with commodities of all kinds, supply and demand vary from time to time and market, and the price of bitcoin fluctuates accordingly.
Estimated average prices
Since there is no global standard for the price of a single bitcoin, how can investors be sure that Google, a digital currency exchange, or another price tracker is accurate? The short answer is that these prices are not, in fact, guaranteed to be accurate. One reason for this is that most bitcoin price trackers calculate an average estimate or a recently traded bitcoin price based on the transaction history of a major bitcoin exchange. Google, for example, bases its figures on the Coinbase API, which is why it pegs the value of bitcoin to one U.S. dollar.
In addition to the (hopefully modest) inaccuracies built into a price tracker or search engine when it comes to estimating the cost of a single bitcoin, investors should also keep in mind that the actual purchase price of that coin on an exchange is likely to be higher. The reason is that most exchanges charge some type of transaction fee. This is typically very modest compared to the price of a bitcoin, especially as bitcoin has skyrocketed in value in recent months, but it introduces additional inaccuracies into the price you may see listed.
Finally, Bitcoin exchanges connect those who have bitcoin and want to sell with those who want to buy.. Different exchanges can have different levels of supply and demand, and the price can be slightly different. Of course, if the price on one exchange is significantly lower than another, that alone will likely shift the supply and demand levels even further.