Crypto currency – new gold or old pyramids! Anton Hanzenko.
Recently, the concept of crypto-currencies has become widely used and, probably, there is no person who has not heard such an expression. More information about crypto-currencies can be found here .
Why crypto currency is so popular
The main reason for the growing popularity of crypto-currencies is their rapid growth in value relative to generally accepted national currencies. The technology blockchain is one of the reasons for the popularity of crypto currency, which was put in their basis and, of course, the capitalization of a particular crypto currency.
Given that blockchain technology guarantees complete anonymity and a high level of protection, one should not confuse it with digital wallets that store crypto currency. The crypto currency was given the status of peculiar off-shores or exchange buffers in which money laundering schemes were conducted. But with mass popularization, the сrypto currencies also received significant capitalization, which turned them into some kind of shares or precious metals, but in inverted commas. Since the value of a particular crypto currency depends directly on its demand for the market, and the capitalization indicator is nothing more than an indicator of market demand. To calculate the exact capitalization of any crypto currency is almost impossible because of the specifics.
An example of the capitalization of the 5 most popular currencies and their market value in US dollars as of October 26, 2017.
- Bitcoin (BTC) – $ 5740; $ 95.640 billion
- Ethereum (ENH) – $ 290; $ 28.380 billion
- Ripple (XRP) – $ 0.20; $ 7.820 billion
- Bitcoin Cash (BCH) – $ 330; $ 5.670 billion
- Litecoin (LTC) – $ 55; $ 2.990 billion
Apparently, the capitalization of the Crypto currency is quite impressive, which indicates a significant demand for the market. As you know, demand creates supply. The crypto-currencies are exist on a similar principle, the number of which by modest estimates exceeds 1200 names. But, their capitalization is very low.
If with prospects of a crypto-currency with a billion-dollar capitalization is more or less clear, then a low-capitalization crypt is highly doubtful. Drawing a parallel with cheap stocks and crypto-currencies – it’s better to buy garbage. The choice is very simple – in addition to capitalization, stocks have asset values, which is not the case with crypto currency, as there is no control or board of directors.
Perhaps, this is the only huge drawback of crypto-currencies and their dignity overnight, as any centralization of the crypto-currency will kill its main advantages.
There are also many examples where crypto-currencies were created for profit. Similar cases put some crypto-currencies in one row with financial pyramids.
Hanzenko Anton