Research on Pricing Mechanism and Security of Digital Currency

With the rapid development of block chain technology and its application, digital currency, which does not rely on national credit endorsements, is emerging. The financial technological innovation is becoming another strong driving forces for promoting social and economic developments. Unlike the price formation mechanism of traditional fiat currency, the price formation mechanism for digital currency is still unclear. Because financial regulators cannot accurately predict the price trend of digital currency, there is a corresponding lack of means to intervene in the price of digital currency in time of crisis. The lack of such technology also provides a way for security attackers with ulterior motives to attack the monetary system by manipulating the prices of digital currency. This paper will take Bitcoin as an example to study the price formation mechanism of digital currency, therefore clarifying the factors affecting the price of digital currency, and provide the means of price supervision, prediction and intervention for financial regulators to ensure the development of digital currency.