An Empirical Study On The Factors Influencing The Price Of Digital Currency

The 21st century is the era of information.The explosive growth of communication technology and Internet technology has caused profound changes in the way of payment.In particular,the birth of Bitcoin on November 1,2008 and thousands of similar virtual digital currencies(including Litecoin,Ethercum and Dogecoin with very interesting name etc.)that followed it became the typical digital currency of "decentralization".In May 2010,someone made the first transaction with Bitcoin,which in fact shows that Bitcoin began to have some kind of currency attribute.On August 2,2019,the central bank said at the second half of 2019 television work conference that it would accelerate the pace of research and development of legal digital currency.In September 2019,Yi Gang,governor of the people’s Bank of China,revealed that the central bank researched digital currency as early as 2014.In April 2020,the wages and subsidies of some city institutions such as Shenzhen and Suzhou will be paid by the central bank’s digital currency DC/EP,which has been tested and used.Therefore,it is of great theoretical and practical significance to study the digital currency represented by Bitcoin.First of all,this paper reviews the relevant literature of domestic and foreign,and makes clear the definition of electronic currency,virtual currency and digital currency,which are the primary problems to be solved,and precisely defines them.At the same time,taking Bitcoin as an example,this paper analyzes the related factors of digital currency.Through the establishment of the relevant theoretical model,we can draw the conclusion that the price of Bitcoin is mainly affected by its supply and demand factors and macro environmental factors.Secondly,this paper uses the Bitcoin price data and other relevant data from May 1,2013 to December 16,2019.After preliminary processing,through the establishment of vector auto-regression model(VAR model)and statistical description,it is preliminarily concluded that Bitcoin price is greatly affected by its demand,especially the trading motivation.At the same time,it is preliminarily concluded that,at least during the sample period,Bitcoin may act as the general equivalent of goods in some fields,used to purchase some special goods,and have some rudiments of future currency.Thirdly,this paper uses the time series data vector auto-regression model for empirical test.The results show that among the demand factors of Bitcoin,the trading motivation and speculation motivation have a greater impact on the price of special currency;other macro environmental factors such as Standard&Poor’ s 500 Index and gold price have a smaller impact on the price of special currency;only the impact of the US Dollar Index on the price of the Bitcoin is negative,which conforms to the relevant theoretical model and is consistent with the expected results.Finally,based on the above analysis results,this paper summarizes the definition of digital currency represented by Bitcoin and the influencing factors of price,and looks forward to the future development and research prospects of digital currency.