FAQ
Bitcoin is a decentralized digital currency of the peer-to-peer payment system of the same name, where users carry out transactions independently, without centralized control and intermediaries.
The Bitcoin network is based on a public, collective ledger called the blockchain. The blockchain records all transactions ever made, so the user's computer can confirm the authenticity of any transaction. The authenticity of each transaction is confirmed by a corresponding digital signature associated with the sender's address, allowing all users to have full control over sending Bitcoins from their own Bitcoin addresses. In addition, anyone can process transactions using specialized computer hardware resources, receiving bitcoins as a reward for this. This process is called “mining”.
Blockchain is a digital ledger with shared access, where chronological order All transactions in bitcoins or other cryptocurrencies are recorded.
Mining is the process of using the computing power of a computer to ensure protection against repeated spending of the same bitcoins in different transactions and to generate new bitcoins in the system. In technical terms, mining is the calculation of a hash of a block header, which includes, but is not limited to, a link to the previous block, a hash of multiple transactions, and a nonce (a random number used once for authentication purposes).
Most often, Bitcoin cryptocurrency is purchased on Bitcoin exchanges such as GDAX or BitStamp, it can also be purchased directly from Bitcoin holders - through trading platforms and online auctions. Payment options are varied - cash, credit and debit cards, wire transfers or even other cryptocurrencies.
Such a “wallet” in the Bitcoin system is essentially equivalent to a bank account. With its help, you can receive bitcoins, store them, and send them to others. There are two main types of these wallets - software and web. A software wallet is a wallet that you install on your computer or mobile device. You have complete control over its security, but sometimes there may be problems associated with the process of installing it and maintaining its functionality. A web wallet is a wallet hosted by a third party. They are often much easier to use, but you must be sure that the hosting provider (hoster) can provide adequate protection for your funds.
Capitalization is usually called the value of all assets that are in circulation. On traditional trading platforms, the role of the latter is played by various papers owned by public organizations. In the case of electronic money, this indicator indicates the total value of all issued coins that are present on the market. In plain language, capitalization is the total value of a particular virtual currency in the world. As a rule, this characteristic is expressed in dollar equivalent. Unlike the algorithm for calculating the value of assets on stock exchanges, a different mechanism is used to determine the capitalization of digital coins. In the first case, turnover on exchanges is taken into account, in the second - total number created coins.
For investors, the capitalization of cryptocurrencies is one of the most important indicators. The higher the so-called ceiling of a coin, the less susceptible to outside influence its value (less volatility). So, in order to move just a few points, a whole series of multi-billion dollar transactions will be required. While even the activity of ordinary players can significantly affect the price of new tokens.
You can also look at the level of capitalization on various specialized services. However, according to experts, one should not completely trust such resources, since they only show an approximate picture. This happens because their algorithms do not take into account the actual turnover of crypto coins, but the number of funds generated. At the same time, they neglect various losses associated with computer equipment. In addition, the inaccuracy in the testimony is associated with the “disappearance” of one million Bitcoins, which Satoshi Nakamoto allegedly left for himself during the formation of the site. Experts have found that a total of 3 to 5 million tokens are considered “lost forever.”
In the past year, the total capitalization of cryptocurrencies was marked by several significant figures. If in the spring it amounted to $100 billion, then by the beginning of November this amount had doubled. In general, the dynamics of capitalization growth amounted to more than 1100%.
The information was taken from CoinMarketCap - one of the most popular services that provides statistical data on virtual currency exchange rates. Turning to the resource, you can see that more than 50% of the entire electronic money market is accounted for by Bitcoin. Second and third places were shared by Ethereum and Bitcoin Cash, respectively.
The capitalization of cryptocurrencies depends on 2 main indicators: the exchange rate and the volume of money in circulation. For example, the issue of Bitcoin is constantly increasing, as the coin continues to be actively mined by miners. However, since the beginning of the platform’s existence, the complexity of the algorithms has been increasing every month, which also has a significant impact on the cost of its tokens.
Some electronic money is characterized by primary emission. In this case, the parameter is influenced by the market activity of the currency and its exchange rate, since the total volume is fixed and unchanged. An example is the Nextcoin resource.
Due to the fact that capitalization is directly proportional to the value of the coin, it also depends on demand indicators. The latter depends on a range of factors:
- Actions of influential players on cryptocurrency exchanges.
- Predictions of experts, various statements of popular analysts.
- Innovative technologies used in the blockchain industry.
- Adoption of electronic money at the legislative level and giving it official legal status.
- Other news information related to virtual coins.
Bitcoin's value has soared this year thanks to increased demand for the digital currency. The popularization of virtual money is associated with its legalization in Japan, the holding of numerous crowdsales, the introduction of the SegWit2x protocol, the constant launch of new forks and the participation of the project team at large-scale conferences.
If at any point the demand for virtual funds begins to decline, capitalization will also fall. Great importance for this parameter is the position of the governments of countries such as China and the USA. If they introduce a ban, the electronic currency will immediately go down. That is, both the price and capitalization indicators will drop sharply. It is worth remembering the situation that took place in 2013. In an extraordinary rally, Bitcoin's price soared to $1,000 before plummeting to $200 as large investors began buying up the coin, attracted by the prospect of quick profits.
This indicator was positively influenced primarily by players from China, who took an active part in the process of withdrawing capital from the state. Since there is a prohibition established at the legislative level, translation Money using conversion to dollars is not possible. But the amounts earned must be stored somewhere. Therefore, investors turned to the opportunities provided by Ethereum and Bitcoin.
The biggest difficulty in determining the value of virtual coins is that their real value cannot be calculated. There is simply no connection to any real objects or currencies. Another reason is the difficulty of identifying the number of lost tokens, since when recording devices fail and keys to electronic wallets are lost, access to digital money is closed forever. This is why the capitalization of cryptocurrencies becomes so complicated.
At the moment, the digital asset market continues to actively develop, which is why the volatility of many tokens is increasing. Different trading platforms introduce different prices for the same coins. However, absolutely all market participants are interested in the successful future of the electronic space and invest real money to purchase or mine virtual coins. However, this does not exclude frequent sharp spikes and drops due to the influx of large volumes of investment funds. Perhaps in the future a certain regulatory mechanism will be used.
Any potential investor should first of all monitor this parameter of virtual money. The latter is also influenced by various events in the world related to blockchain and cryptocurrencies.
Some people mistakenly believe that value and capitalization are identical concepts. Of course, they are closely interrelated, but they belong absolutely different things. For example, the quotation of coins and their value have a direct relationship. However, if the former begins to grow, and a strong player appears on the market, numerous small speculators are sure to appear as well. If the profit of a large investor decreases or is fixed, a correction is made.
The continued devaluation of the yuan against the dollar will only increase the capitalization of virtual funds. At the same time, the process itself occurs with quite high speed. Over the past 3 months, the Chinese national currency has managed to strengthen its position, and this was reflected in the quotes of Dash, Monero and Zcash. It is these digital currencies that have been most impacted by the return of capital to the strengthening yuan. This event had virtually no impact on Bitcoin, since its rate is primarily determined by demand.
In 2017, the No. 1 cryptocurrency positioned itself as a reliable exchange asset with an upward trend. As its price increased, capitalization also increased, and this process will last at least another 9 months. If the governments of world powers decide to legalize electronic coins, this will have a positive impact on their value. However, the granting of legal status to tokens is unlikely to take place in the near future.
Having understood what capitalization is, the user inevitably faces the question of what is the benefit of knowing this information and how to apply it. As mentioned above, this parameter should not be confused with the cost of tokens. They are different in essence, although they have a certain relationship - a collapse in capitalization will provoke a fall in electronic money quotations, and their upward price jump will lead to its growth.
The mechanism is explained by the fact that the value of a digital currency is largely based on people’s trust. Watching how it breaks the next high, investors conclude that demand has begun to exceed supply. Some players invest colossal amounts, and, therefore, the asset has potential and its price will rise in the future. To get the greatest benefit, you need to invest in one or another project immediately after the start. After all, as soon as the digital currency attracts the interest of truly large players, they immediately pump it up. In addition to them, a whole variety of various exchange bots and small speculators take part in the process, who accelerate the artificial price jump to unprecedented proportions. This will continue until any negative news appears or large investors themselves decide to stop inflating the speculative bubble. Then, as a rule, a correction follows, and in some cases even a trend change.
Other significant differences between electronic coins and classic exchange assets include the inability to correctly establish real capitalization indicators, since it will not be possible to accurately determine the amount of funds available to investors. After all, a huge number of tokens have disappeared as a result of hacker attacks, are stored in forgotten wallets or were sent to non-existent addresses (it is impossible to restore a personal key, as well as cancel a transaction). In addition, any hardware malfunction can cause the loss of digital coins if they were placed in a hardware wallet that was installed on the computer.
Despite the fact that the maximum and current number of coins of certain types of virtual money is known exactly, it is almost impossible to figure out how many of them are in real circulation. According to experts, up to 4 million Bitcoin tokens alone were lost forever, which makes it impossible to accurately calculate the level of capitalization.
However, this parameter is still very indicative and demonstrates the general degree of popularity of the platform. That is why, before starting trading on the stock exchange, it would be useful to analyze the movement charts of this characteristic.
Capitalization of cryptocurrencies is rightfully considered one of the the most important indicators in the business of trading. It reflects the total value of all tokens that are in circulation, and also demonstrates the degree of popularity of the site.
When choosing a digital currency for investment, you should also rely on this characteristic. A coin with a significant capitalization is quite resistant to minor movements. An instant price jump is unusual for such a currency. But platforms with small capitalization, on the contrary, have an unstable exchange rate and can change it every minute. Thus, decentralized platform No. 1 Bitcoin increased its value 10 times in 1 year. Ethereum achieved similar results in just 6 days.
Anyone considering investing in cryptocurrency should take these nuances into account. In addition, you should not ignore daily changes in capitalization - such fluctuations are a kind of market signals.
It is important not only for investors, as many are accustomed to believe. These indicators will be useful for every player in the cryptocurrency market. Let's figure out what it is and how capitalization can affect your decision when completing a transaction.
It should be noted that the term “capitalization” is borrowed from general economics, where it does not mean exactly what it means in the digital currency segment. Capitalization in the economy is calculated based on many indicators: you need to take into account various development factors, personnel productivity, prospects and a bunch of other points. In the world of cryptocurrencies, everything is simpler - capitalization is calculated using two variables.
What is cryptocurrency capitalization? This total value of all coins certain type On the market. Calculating it is quite simple: you need to multiply the price per coin by the total amount of coins on the market.
Capitalization mainly shows the stability of a particular currency on the market. This important parameter, which often determines whether a particular digital currency is worth investing in.
Why is the market capitalization of cryptocurrencies important?
We seem to have figured out what capitalization is. But why is it needed? Why should it be taken into account when making decisions? This is also worth understanding in order to understand how the market operates. Let's look at a few simple examples to understand the importance of this parameter.
Let's consider a situation where there is a cryptocurrency with a low price on the market and the number of coins is also small - for example, let's take 1,000 units. Then the capitalization will be equal to $1 x 1000 = $10,000. This means that a trader who has at least 500 coins in his asset has a huge influence on this type coins
Let's take a different situation - there is a currency on the market with a high price ($100), but the number of coins is still small - the same 10 thousand. How will this affect the stability of the exchange rate? Those who manage to mine 5,000 coins or have them in their assets for another reason will be able, in fact, to control the rate. However, an outside player will not be able to simply take control into his own hands - to do this, he will need to buy a lot of expensive coins.
The third situation is the availability of a huge number of coins at a low price. For example, the price is $1, the amount of coins is 1 million. The capitalization of the currency will be $1 million. This means that if someone buys even 5 thousand coins, he will not be able to greatly influence the market. To do this, you will have to buy, for example, 500 thousand coins - such a situation is almost impossible.
And finally, a situation where there are many units of currency on the market at a high price. This is the most sustainable option - for traders to influence the exchange rate, huge investments are needed. The possibility of a rate collapse in this situation is almost impossible.
Thus, capitalization shows players and investors how reliable a particular cryptocurrency is. High capitalization will be able to protect it from, for example, not entirely fair, when a group of traders can artificially raise the price of a coin in order to later sell investments at a higher price.
High capitalization is also a sign that the coins have become popular among traders. This means that they are more or less evenly distributed among users and no one has much power to influence the rate.
Cryptocurrency market capitalization: how to use it in trading
If you want to use all available information to make profitable transactions with electronic money, then you definitely need to learn how to obtain the correct data based on capitalization.
It is important to distinguish why a certain currency has a high capitalization. For example, the reason may be that there are a lot of coins, but they are all inexpensive. What value does this have for the investor? If he decides to invest his $100 to buy 100 coins at $1, then with a potential increase in the rate of $1, he will receive a 100% profit.
Another option is that he bought 10 coins at a price of $10 - with a similar price increase, he will be able to earn only 10% of the profit.
However, the presence large quantity cheap coins may indicate the unpopularity of this money and the impossibility of increasing its value in the future.
If the situation is somewhat different, and large capitalization is a consequence high price for coin, that is, there are two options:
- Checking currency and investing in it;
- Currency check and investment refusal.
What is verification and how to carry it out? To analyze an investment object, you need to collect some data about it: development and growth prospects, information about the development team, management strategies, plans for the distribution of currency on the market, dividends, and so on. All this will allow you to determine the technical value of the cryptocurrency.
If there is reason to believe that the rating of cryptocurrencies by capitalization will go up in the future, it makes sense to invest money. However, in the case where the reasons high cost coins are not clear, then they may simply collapse due to the fact that there is not a strong enough foundation. Or maybe it’s just a pump.
Factors influencing the capitalization of cryptocurrencies
In order to understand how capitalization is formed, you need to understand what contributes to its formation. In general, as we have already said, there are two main components: the price per coin and the total amount of coins on the market.
Demand factors play a significant role in the formation of capitalization. How more people are interested in a particular cryptocurrency, the higher its value and total quantity. Bitcoin, for example, is mined by tens of thousands of people every day, but each new coin is increasingly difficult to obtain and this directly affects pricing.
What other factors need to be considered?
- Behavior of large traders in the market;
- Statement by popular analysts who can predict the future of various currencies;
- Innovations that can be used in the segment;
- Media influence and public policy for the development of cryptocurrencies;
- Passing laws that will accept electronic money and officially approve its use in the country.
For example, the value of Bitcoin increased last year due to various factors: legalization of cryptocurrencies in Japan, mass dissemination of information through the media, development of SegWit2x and many other reasons. All this directly affects market demand, and therefore on capitalization.
If, for example, governments large countries, such as the USA or China, will decide to ban digital money in their countries - demand will fall, as, in fact, capitalization.
How to calculate the capitalization of cryptocurrencies?
In general, there are special services that show constantly updated figures for various types digital money. But these will, of course, not be entirely accurate numbers.
The fact is that it is impossible to obtain data that will be one hundred percent reliable: if some user loses the key to the wallet, then all the funds stored there will sink into oblivion. Formally they exist, but in practice no one uses them.
Capitalization is usually calculated in US dollars.
Rating of cryptocurrencies by capitalization in 2018
For better orientation in the digital currency market, it is worth familiarizing yourself with the most stable money that is now in the segment. Below we present the top 10 largest cryptocurrencies by capitalization (March 2018):
- Bitcoin;
- Ethereum;
- Ripple;
- Bitcoin Cash;
- Litecoin;
- Cardano;
- Stellar;
- Monero;
So, for example, today market capitalization is $179,157,196,920 – if you think about it, these are really huge numbers. If we divide this figure by the price of Bitcoin, we can get the approximate number of coins on the market: $179,157,196,920 divided by $10,597.60 and we get 16,905,450 units.
But the next pursuer of Bitcoin, Ethereum, has more modest figures - $77,634,977,157. But they are modest only against the background of this giant.
What is more important, cryptocurrency capitalization or price: let’s summarize
In the final part of the material, I would like to compare the importance of two indicators: price and capitalization. Of course, we do not figure out what the user needs to focus on. Both information will be important and you should not neglect any numbers.
The price of digital money determines its demand in the market. The higher it is, the more people want to buy it - every schoolchild knows the simple laws of economics. But you shouldn’t invest right away - there may be various reasons why the price is so high. Real and artificial.
Capitalization rather shows the volume that a particular currency occupies on the market - its stability and development opportunities. If many coins provide a large capitalization, then there is a chance that traders will buy them and the price will rise. When assessing the stability of money, you should not focus on price.
Few people know what “cryptocurrency capitalization” is, but cryptocurrencies are rightfully considered 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. Realities modern life are developing in such a way that to be successful in a world that is constantly changing and growing with innovations is possible only by keeping pace with all these innovations.
And although cryptocurrency is no longer a curiosity, and many have known about it for a long time and successfully made money, there are still many gaps in knowledge about cryptocurrencies. In this article I will discuss the issue of capitalization of cryptocurrencies, tell you in detail what it is and what the price of cryptocurrencies depends on.
Capitalization is
The concept of capitalization is often misinterpreted due to the low financial literacy of the majority of the population, although the concept is not new. This concept is not classified as anything and, often, it simply loses its deep meaning.
Capitalization is the market value of assets (usually company shares) in circulation. In order to find out the capitalization, you need to multiply the number of all available shares by the cost of one.
I will explain this concept in simple example. There is a company that issues 100 shares, and one such share of the company has a cost of 100,000 rubles. In order to find out how much the entire company, whose shares are represented in shares, is worth by stock exchange standards, it is necessary to multiply the number of these same shares by the cost per share. Thus, the price of our company, and therefore capitalization, is 10 million rubles. This is how we experimentally established what capitalization is and what it directly depends on.
If we talk about cryptocurrency, then each of its types has its own capitalization (for example, the capitalization of onecoin). At the same time, do not confuse capitalization with the exchange rate - these are different concepts, although interconnected - the higher the exchange rate becomes, the higher the market capitalization rises. But with cryptocurrency, not everything is as simple as with the shares of the company that was presented above. If the number of shares can be counted and recorded, then with cryptocurrencies the situation is somewhat different and it follows from the very feature of virtual money. First of all, it is important to note that in general the issue of capitalization of cryptocurrencies is quite controversial - many financiers and researchers in this area refer to the fact that it is simply impossible to establish the exact amount of the market value of any of the cryptocurrencies. This is justified by the fact that many cryptosigns have long been lost and it is not possible to determine how many of them and where they are. For example, the creator (or creators) of Bitcoin, Satoshi Nakamota, went missing, “taking” 1 million bitcoins with him. There are also numerous cases where, at the dawn of the formation of cryptocurrencies, virtual money disappeared along with lost passwords, burnt hard drives on which they were stored, etc. Today, when humanity has realized the value of virtual money (many people invest in Bitcoin), they are not lost just like that, but still, some cases of loss of cryptocurrencies do occur.
So, the capitalization of a cryptocurrency depends on its total quantity and cost per unit. The mechanism for calculating the market value of any cryptocurrency is quite incomplete, 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 cryptosigns, the number of which is constantly increasing (for example, the reason for this is cloud mining of Bitcoin and the mining of other altcoins). These are not shares of a company that were issued once and rise or fall in price, because both Bitcoin and altcoins continue to be generated. Do not forget that it is simply impossible to know the exact number of even those bitcoins.
It is known how many cryptosigns were generated, but establishing whether they actually exist at a given point in time is an unrealistic task. However, few people listen to the words of experts and in the wake of the hype around Bitcoin, everyone continues to count it market value. At the same time, everyone also continues to turn a blind eye to the fact that Bitcoin or other currency is a monetary sign, 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 store? One way or another, according to preliminary estimates, from 1.5 to 4 million bitcoins are lost irretrievably, because if the data from hard drive lost, it is not possible to restore access to wallets, and therefore to currency. As for me, this is an impressive enough amount for the calculation of the market value of cue balls to be considered incorrect. Thus, the concept of “cryptocurrency capitalization” is quite relative, and many are skeptical about whether it is even possible to apply this formulation to cryptocurrencies.
Cryptocurrency market
However, the cryptocurrency market exists, and it is simply necessary for an investor who wants to invest in this area to keep a record of the total value of a particular cryptocurrency. Why do you ask, because it seems that it is enough to know the course monetary unit? In fact, capitalization shows an important parameter that gives an idea of what currency is worth mining or in which to store your savings. Despite the limited emission, the market value of the cryptocurrency is a priori programmed to be constant economic development. So, just as the number of signs of a particular 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 the one that has the largest market capitalization (and no cryptocurrency monero or others can compare with this crypto giant). Moreover, this cryptocurrency even breaks records for market value - at the beginning of 2017, the amount reached 15 billion US dollars. At the same time, I note that Bitcoin is the most fickle, and its rate constantly fluctuates different directions– of course, capitalization will change its indicators.
Cryptocurrencies and market capitalization
The cryptocurrency market is very unstable and different exchanges show different pricing policy regarding him. Since cryptocurrencies have high volatility, the indicators on one exchange may be less, on another more and even in different time days when calculating capitalization, you can get different indicators. However, it cannot be denied that the cryptocurrency market exists - it exists and is even developing very actively - it is not for nothing that cryptocurrency is considered the currency of the future. Following the general interest in cryptocurrency and the influx into its market real money, 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 monetary units.
| # | Logo | Name | Symbol | Algorithm | Price USD | Market capitalization |
|---|---|---|---|---|---|---|
| 1 | BTC | SHA-256 | 4922.98 | 86745500000.00 | ||
| 2 | ETH | Dagger-Hashimoto | 166.846 | 17602000000.00 | ||
| 3 | XRP | XRP | ECDSA | 0.35835 | 14958900000.00 | |
| 4 | LTC | Scrypt | 79.9385 | 4889710000.00 | ||
| 5 | BCH | SHA-256 | 778.107 | 13262100000.00 | ||
| 6 | EOS | EOS | 6.01433 | 4560090000.00 | ||
| 7 | ADA | SHA-256 | 0.149199 | 3868290000.00 | ||
| 8 | XLM | Transaction fee | 0.125217 | 2411890000.00 | ||
| 9 | NEO | NEO | 53.3117 | 3465260000.00 | ||
| 10 | USDT | 1.00652 | 2055260000.00 | |||
| 11 | TRON | TRX | 0.0489173 | 3216220000.00 | ||
| 12 | IOTA | IOTA | DAG | 2.5058 | 6964950000.00 | |
| 13 | IOTA | MIOTA | 1.10877 | 3081860000.00 | ||
| 14 | XMR | CPU mining, CryptoNight | 68.1846 | 1151920000.00 | ||
| 15 | Dash | DASH | X11 | 126.763 | 1106610000.00 | |
| 16 | Qtum | QTUM | 14.6548 | 1296710000.00 | ||
| 17 | BNB | Transaction fee | 10.9314 | 1082360000.00 | ||
| 18 | NEM | XEM | Blockchain | 0.0719291 | 647362000.00 | |
| 19 | ICON | ICX | 2.56023 | 990918000.00 | ||
| 20 | ETC | Dagger-Hashimoto | 5.55369 | 607753000.00 | ||
| 21 | OMG | SHA-256 | 8.98254 | 916601000.00 | ||
| 22 | ICN | 3.65822 | 361909000.00 | |||
| 23 | Zcash | ZEC | Equihash | 70.9912 | 442467000.00 | |
| 24 | BTG | 48.8089 | 825353000.00 | |||
| 25 | DOGE | Scrypt | 0.00278655 | 331374000.00 | ||
| 26 | Waves | WAVES | Transaction fee | 3.09376 | 309376000.00 | |
| 27 | PPT | Scrypt | 13.5363 | 500898000.00 | ||
| 28 | DCR | Blake256 | 23.7562 | 227223000.00 | ||
| 29 | Lisk | LSK | Sidechain | 1.90488 | 220664000.00 | |
| 30 | Augur | REP | Smart contract | 17.701 | 194711000.00 | |
| 31 | BTS | Transaction fee | 0.07087 | 191707000.00 | ||
| 32 | SNT | Transaction fee | 0.0866719 | 300793000.00 | ||
| 33 | DGB | SHA256, Scrypt, Qubit, Skein, Groestl | 0.0144836 | 168383000.00 | ||
| 34 | BCN | CPU mining, CryptoNight | 0.00091055 | 167602000.00 | ||
| 35 | VERI | Scrypt | 131.985 | 268807000.00 | ||
| 36 | Ethos | BQX | 1.87809 | 139967000.00 | ||
| 37 | Steem | STEEM | SHA-256 | 0.479859 | 148345000.00 | |
| 38 | KMD | Equilhash | 1.26554 | 142332000.00 | ||
| 39 | S.C. | Blake2b | 0.00325477 | 130548000.00 | ||
| 40 | STRAT | Smart contract | 1.09399 | 108604000.00 | ||
| 41 | Golem | GNT | 0.099944 | 96308200.00 | ||
| 42 | NMC | 5.87968 | 86645400.00 | |||
| 43 | Ardor | ARDR | Scrypt | 0.0875891 | 87501500.00 | |
| 44 | Gas | G.A.S. | Scrypt | 16.8641 | 168446000.00 | |
| 45 | FUN | Scrypt | 0.0340629 | 156862000.00 | ||
| 46 | Ark | ARK | SHA-256 | 0.719552 | 78697400.00 | |
| 47 | FCT | Transaction fee | 8.29918 | 78193400.00 | ||
| 48 | MAID | Transaction fee | 0.146908 | 66483700.00 | ||
| 49 | TKN | 2.30486 | 54496200.00 | |||
| 50 | BTCD | SHA-256 | 44.9151 | 57889300.00 |
Cryptocurrency capitalization - what is it? Using Bitcoin as an example
The term capitalization characterizes the total market value of any assets in circulation. In the case of the stock market, assets are securities public companies on stock exchanges. The capitalization of an asset such as a cryptocurrency shows the total value of all issued digital coins on the market.
If in simple words, then the capitalization of cryptocurrencies is the total value of a given digital currency in the world. Usually the indicator is taken in dollars.
The mechanism for calculating capitalization in the cryptocurrency world differs from the calculation of this parameter in the stock market. In crypto, the total amount of cryptocurrency generated is taken into account, and not its turnover on exchanges, as is done with securities.
Capitalization of Bitcoin and other coins
Capitalization is an important parameter in assessing the attractiveness of cryptocurrency for investment. The higher a coin’s ceiling, the lower its volatility and the more difficult it is to influence its value. For example, in order to move the Bitcoin rate by a few percent, it is necessary to carry out billions of dollars in purchases on exchanges. And the cost of a new altcoin is influenced by the activity of average traders.
Experts note that the real capitalization of Bitcoin differs from what services like CoinMarketCap “draw”. These sites take into account the amount of cryptocurrency generated, rather than its actual turnover. The fact that some of the coins were forever lost due to hardware failure is ignored; the fate of 1,000,000 bitcoins that were given to Satoshi Nakamoto at the dawn of BTC development also remains unknown. The total “losses” of Bitcoin emission range from three to five million coins.
In 2017, the cryptocurrency market broke several capitalization records. In the spring of 2017, the $100 billion mark was surpassed for the first time, and at the beginning of November it already reached 200 billion. In total, since the beginning of 2017, the dynamics of capitalization growth exceeded 1100%. The schedule is as of the beginning of November 2017.
The chart is taken from the CoinMarketCap resource. This is the most popular service for monitoring the rate and capitalization of cryptocurrencies. According to his data, more than 55% of the total market volume in the crypt falls on Bitcoin. Ethereum confidently occupies second place, and Bitcoin Cash, formed as a result of a Bitcoin hard fork, is in third place.
General table of cryptocurrency capitalization as of the beginning of November 2017:
| Coin | Market capitalization, $ | Market rate, $ | Emission |
|---|---|---|---|
| Bitcoin | 118 968 665 144 | 7137.79 | 16,667,437 BTC |
| Ethereum | 28 836 249 004 | 301.73 | 95,568,444 ETH |
| Bitcoin Cash | 10 305 476 035 | 614.62 | 16,767,150 BCH |
| Ripple | 7 906 748 850 | 0.205202 | 38,531,538,922 XRP |
| Litecoin | 2 980 480 107 | 55.49 | 53,710,957 LTC |
| Dash | 2 206 732 612 | 287.59 | 7,673,163 DASH |
| NEO | 1 700 939 500 | 26.17 | 65,000,000 NEO |
| NEM | 1 674 207 000 | 0.186023 | 8,999,999,999 XEM |
| Monero | 1 566 589 268 | 102.26 | 15,319,069 XMR |
| Ethereum Classic | 1 437 501 991 | 14.79 | 97 195 499 ETC |
As you can imagine, this data changes in real time. To track current indicators, use the CoinMarketCap service.
Factors influencing capitalization
Two main factors influencing the capitalization of Bitcoin and most other cryptocurrencies are the number of coins in circulation (emission) and their exchange rate.
In the case of BTC, the emission is constantly growing due to mining - the production of cryptocurrency. This process is designed in such a way that the complexity of production is constantly increasing. And this largely affects the appreciation of the exchange rate.
There are coins with primary issue. For such a cryptocurrency, capitalization directly depends on the exchange rate and market activity. After all, the total volume of coins does not change. An example of such a cryptocurrency is NXT.
Since capitalization is tied to the exchange rate, it is influenced by general demand in the market. The higher it is, the higher the rate and the higher the capitalization of the asset. In turn, demand is influenced by the following factors:
- Behavior of large traders on exchanges;
- New developments in the field of cryptocurrencies;
- Statements famous personalities, forecasts of experts and financiers;
- Laws, determination of the status of Bitcoin and cryptocurrencies;
- Other important news related to the world of cryptocurrencies.
The increase in the Bitcoin rate in 2017 occurred against the backdrop of an increase in demand for cryptocurrencies in general. This was influenced by numerous ICOs, the legalization of Bitcoin in Japan, BTC forks, the decision to switch to the SegWit2x protocol, numerous events and exhibitions. All this is of an avalanche nature, so the rate and capitalization of the cue ball is constantly growing.
When demand decreases, capitalization falls. If tomorrow the United States or China release a bill banning Bitcoin, the market will immediately react by “draining” the cryptocurrency. The exchange rate will drop significantly, and with it the capitalization. After reaching the $1,000 mark at the end of 2013, the value of Bitcoin decreased by 5 times in 1.5 years. This happened against the backdrop of the sale of BTC by large investors in order to make short-term profits.