As Bitcoin and Ethereum continue their record-breaking run over the past weeks, we’d like to take a moment during this jubilation to explain the dynamics, what you should know and how to protect yourself against transactions that you might come to regret. Investments decisions don’t start with deposits or purchases, they should start with education.

The price of digital currencies like Bitcoin and Ethereum is determined by supply and demand: people who want it (buyers) and people who have it (sellers). Luno is the platform connecting these buyers and sellers; Luno does not determine the price of Bitcoin or Ethereum.

During surge periods, like over the past week, demand is much higher than supply since more and more people want digital currency and, something most people prefer not to see, just because the price is going up.

When you buy BTC or ETH on the Luno platform, you are buying it from someone else (called the “counterparty”). This counterparty is a little more complicated than just saying “someone else”, since we are often connected to multiple sources of liquidity (i.e. marketplaces where people buy and sell digital currencies). You could just be making one big purchase, but you’re buying from multiple sellers, who, depending on which country you are in, could even be from multiple other countries. However, the same rule of supply and demand still applies.


Here are some questions we are frequently asked
“Why has the price risen so much?” – The supply side is fixed, so that’s easy – on the demand side it’s a combination of increasing institutional interest (and new instruments to help them get exposure like shorting and ETF’s),
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