A cryptocurrency price is the price that one cryptocurrency can be exchanged for another. Demand and supply for the currency in the open market determines this price, but it can also be influenced by speculation, whales and news.

Cryptocurrency prices are always quoted on the basis of 1: XXXX.  In other words: The number of the Right-Hand Side equals to one of the Left-Hand Side e.g. (ETH/BTC 0.029615, 1 ETH = 0.029615 BTC).

Bid and Offer Quotations

There are always two (counter) parties to each transaction:

• The party that requests a price (Price Taker/ Market User)
• The party that supplies a price (Price Maker/Market Maker)

On the binance exchange currently, lowest offer price (sell) for ETH/BTC is 0.029646 and the lowest bid price (buy) for ETH/BTC is 0.029645. This represents a 0.00001 bid-offer spread between the buyer (price taker) and the seller (price maker). This is said to be the market makers return for the risk assumed in making a two-way price.

This concept of price maker and price taker can be confusing. It is however vital that you understand the following:

• Who is making the price?
• Which is the base cryptocurrency?

Price Makers and takers all wish to buy low – sell high, i.e. buy low – sell high. We need to remember if we wish to buy then:

• We buy on our bid as a price maker.
• We buy on someone else’s offer as a price taker.

Thank you for learning with me and hope you have a good rest of the day!

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