Today, you’ll learn all about the crypto market and how to take advantage of the growing economy.
The definition of market cap in cryptocurrency is quite similar to the definition in traditional securities.
In cryptocurrency, the market cap is the current circulating supply of tokens multiplied by the current token price. So, for example, if the current bitcoin price is $20 and there are 100 bitcoin in circulation, then the bitcoin market has a capitalization of $2,000.
As of August 2019, the estimated crypto market capitalization was over $250 billion.
As you learned earlier, there are thousands of cryptocurrencies. Here’s why.
1. Natural progression
Bitcoin was invented as a decentralized, peer-to-peer alternative to the traditional financial system.
Bitcoin is an electronic payment system that uses cryptographic methods and a peer-to-peer version of electronic cash for secured financial transactions.
But as bitcoin became more popular and more widespread, people began realizing that there are a lot of different ways that the blockchain technology underpinning cryptocurrencies can be used to create other kinds of digitally-based solutions to other issues.
Some of the problems that cryptocurrencies are being developed to solve include:
- Payments and currencies: Bitcoin, Litecoin, Nano, Dogecoin.
- Privacy: Monero, Verge, Komodo, Zcash.
- Computing and data management: Siacoin, Golem, Holo.
- Platforms: Ether, Cardano, NEO, NEM.
- Business and protocols: Binance Coin, ICON, VeChain, Ardor.
- Fintech: Ripple, Stellar, OmiseGo, QASH.
- Entertainment: Steem, Tron, Loom, WAX.
Sometimes cryptocurrencies are created during a process known as forking, or the separation of a blockchain into two branches.
There are two types of cryptocurrency forks: a soft fork and a hard fork.
- A soft fork occurs when an update takes place, and the blockchain remains valid even after that update. An example of a soft fork is SegWit.
- A hard fork happens when the older version of the blockchain remains valid even after the emergence of a new blockchain version. Examples of a hard fork are Bitcoin Cash, Bitcoin Gold, and SegWit2x.
2. Huge financial returns and the ICO boom
Hundreds of new cryptocurrencies were launched during the ICO boom of 2017— all in the hope of grabbing massive financial returns that existing cryptocurrencies experienced that year: