Few people know what “cryptocurrency capitalization” is, and in fact, cryptographs rightly consider the currency of the future and knowing what their price depends on is the duty of every inhabitant of the planet who considers himself financially literate. The realities of modern life are such that to be successful in a world that is constantly changing and acquiring innovations, you can only keep up with all these innovations. And although the cryptocurrency is no longer a wonder, and many people long ago know about it and successfully earn it, there are still many gaps in knowledge about cryptographic signs. In this article I will reveal the issue of cryptocurrency capitalization, I will tell you in detail what it is and what the price of cryptocurrency depends on.
Capitalization is
The concept of capitalization is often misunderstood due to the low financial literacy of the majority of the population, although the concept is not new. What is the only notion that this concept is attributed to and, often, it simply loses its deep meaning.
Capitalization is the market value of the assets (most often referring to company shares) in circulation. In order to know the capitalization, you need to multiply the number of all available shares by the price of one.
Let me explain this concept with a simple example. There is a company that issues shares of 100 pieces, and one such share of the company has a value of 100,000 rubles. In order to find out how much the whole company costs by the standards of exchange, the shares of which are represented in the shares, it is necessary to multiply the number of these shares by the cost per piece. Thus, the price of our company, and hence the capitalization, is 10 million rubles. It was in such an experimental way that we established what capitalization is and why it depends directly.
Cryptocurrency capitalization
If we talk about cryptocurrency, then each of its varieties has its own capitalization (for example, onecoin capitalization). At the same time, do not confuse capitalization with the exchange rate - these are different concepts, although interconnected among themselves - the higher the exchange rate becomes, the higher the market capitalization rises.
But with cryptocurrency is not so simple as with the shares of the company, which was presented above. If the number of shares is amenable to counting and accounting, then with cryptocurrency the situation is somewhat different and it follows from the very peculiarities of virtual money. First of all, it is important to note that, in general, the issue of cryptocurrency capitalization is rather controversial - many financiers and researchers in this field claim that it is simply impossible to establish the exact amount of the market value of any of the cryptocurrencies. It is justified by the fact that many cryptographic signs have long been lost and it is not possible to determine how many such ones are and where they are. For example, the creator (or creators) of Bitcoin Satoshi Nakamotu went missing, “taking” with him 1 million bits. There are also numerous cases where, at the dawn of cryptocurrency, virtual money disappeared along with lost passwords, burned hard drives that were stored, etc. Today, when humanity has comprehended the value of virtual money (many make investments in Bitcoin), they just don’t get lost, but still, some cases of missing cryptographic signs are taking place.
Methods and mechanisms
So, the capitalization of a cryptocurrency depends on its total quantity and cost per unit. The mechanism for calculating the market value of any of the cryptocurrencies is quite insufficiently finished, because, according to many experts, the amount that is called today is very far from the real state of affairs. This is due to the very specifics of the cryptographs, the number of which is constantly increasing (for example, the reason for that is bitcoin mining and mining of other altcoins). These are not company stocks that were issued once and are rising or falling in price, because both Bitcoin and altcoins continue to be generated.
Do not forget that knowing the exact number of even those bitcoins is simply impossible. It is known how many cryptographs were generated, but to establish that they really exist at a given time is an unrealistic task.
Nevertheless, few people listen to the experts and, in the wake of the hype around Bitcoin, everyone continues to calculate its market value. At the same time, everyone continues to turn a blind eye to the fact that Bitcoin or another currency is a banknote, albeit a virtual one, and it is not advisable to equate it with company shares - is it possible to pay for a company share in a cafe or shop?
Anyway, according to preliminary estimates, from 1.5 to 4 million bitcoins are irretrievably lost, because if the data from the hard disk is lost, then it is not possible to restore access to the wallets, and hence the currency. As for me, this is quite an impressive amount in order to calculate the market value of the cue ball as incorrect. Thus, the concept of “cryptocurrency capitalization” is rather relative, and many are skeptical about whether it is possible to apply this formulation to cryptographic signs at all.
Cryptocurrency market
However, a cryptocurrency market exists, and an investor who wants to invest in this direction, just keep track of the total value of one or another cryptocurrency. Why do you ask, because it seems to be enough to know the course of the currency? In fact, capitalization shows an important parameter, which gives an idea of which currency is worth mining or which one to keep your savings.
Despite the limited emission, the market value of cryptocurrency is a priori programmed for continuous economic development. Since the number of signs of a currency is constantly increasing, and the exchange rate is growing depending on the need, then capitalization cannot remain unchanged or go down. The most popular, and therefore expensive in every sense, currency is Bitcoin - it is he who has the largest market capitalization (and no monero cryptocurrency or others can match this crypto giant).
Moreover, this cryptocurrency even breaks market value records - at the beginning of 2017 the amount reached 15 billion US dollars.
At the same time, I note that Bitcoin is the most volatile, and its course is constantly jumping in different directions - of course, and capitalization will change its performance.
Cryptocurrencies and market capitalization
The cryptocurrency market is very unstable and various exchanges show different pricing policies in relation to it. Since cryptocurrencies have high volatility, indicators on one exchange may be less than another, and even at different times of the day, when calculating capitalization, you can get different indicators. Nevertheless, it cannot be denied that the cryptocurrency market exists - it exists and even develops very actively - it’s not for nothing that they consider the cryptocurrency to be the currency of the future.
After the general interest of cryptocurrency and the inflow of real money into its market, the scale of this very market began to increase significantly. Many even little-known cryptocurrencies can boast that their capitalization has reached not only millions, but also billions, and this contributes to an even greater increase in demand for virtual currency units.