Cryptocurrencies are based on cryptography, it is the name itself that suggests it, but for many people, especially the early days approaching this technology, this means almost nothing; therefore I try to be as clear as possible and to explain well what it means what I have just written.

Cryptography is nothing more than the tool through which users can be sure of not having their funds stolen; for instance let's take an example, which is certainly a simplification and also a little pulled by the hair, but which makes the idea of ​​what it means very well. We imagine a service like gmail, anyone can access this platform, our email address (which we also use to access our account) is almost always in the public domain or, in any case, it is known to many people, however, to physically access the email address you need to know the password.

Here, with bitcoin is almost the same thing, the network is public, anyone can access it, as are (public I mean) the addresses where the bitcoins are stored (can be easily obtained by hacking on an explorer) but to physically access an address and the bitcoins that are contained there must be in possession of the private key that allows you to move those funds. The private key, therefore, is equivalent to the password that allows us to access our address gmai; without a password no one can access our account and without a private key nobody can handle the funds held in a wallet.

This is what is meant when cryptocurrencies are based on cryptography; the example, as mentioned, is a bit of a simplification (a mail account, for example, can be hacked, a private key may not) but still allows the less experienced to easily begin to understand what we are talking about. However, what has just been written is valid from a strictly technological point of view, but what causes price movements on the markets?

From this point of view, things are simpler because the usual dynamics that also act on the classic financial markets move the prices. Every day, in fact, the bitcoin network processes a large number of transactions, these are the result of commercial relations, speculation and the creation of new companies; also here we are going to make examples so as to better understand what we are talking about.

Many companies accept bitcoin payments, but to protect themselves from volatility, they have entered into partnerships with other companies that process payments and convert all payments received in fiat currency into real time; so if I manage an e-commerce and I get paid in bitcoin the payment processor converts the sum that the user pays me in BTC in fiat currency and, in doing so, generates a downward pressure.

The sum of all the exchange operations from bitcoin to fiat currency generates bearish tension, while, at the same time, the sum of all the operations of those who buy bitcoins with fiat currency generates bullish tension; the price, therefore, is the result of all these operations, it grows or falls based on the fact that the bulk of the liquidity is concentrated in the hands of the buyer or the seller.

Obviously, this type of dynamic adds up to the operations of the traders, who buy and sell trying to earn on price changes; to this must be added all the new companies that, to start their own business, need to buy bitcoins or those that, on the other hand, liquidate (for various reasons) their own BTCs.

For example, suppose I have 1 million dollars to invest and I wanted to create a network of ATMs in my city; in addition to buying ATMs I will also have to worry about having enough coins to satisfy the demand at the counters, so I will have to buy bitcoins.

In the same way if I were a miner and I realized that due to the excessive cost of electricity I am undermining at a loss I could decide to close my way, sell the equipment and, perhaps, even the coins accumulated up to that point.

To conclude, therefore, the cryptocurrency market is based on all transactions performed by individuals, individuals and traders both in the case they sell and in the event that they buy.