Is market cap a good way to measure the value of crypto?
No, market capitalization is in no way an indicator of a cryptocurrency’s value. However, it is a good indicator of a currency’s popularity i.e. higher demand, higher price and general circulation in the market.
While there are a total of only 21 million Bitcoins available, BTC is valued at nearly 40 times that of its closest contender; Ethereum. Thus giving it the largest market cap.
On the other hand, while XRP is rated at around $0.50 per token, there are more than 40 billion XRP coins in circulation, thus giving it one of the highest crypto market caps.
These 2 differing extremes should make it clear that market cap is not a reliable way of determining a cryptocurrency’s actual value. All too often, amateur investors have repeatedly fallen into this trap – resulting in them losing their entire investment.
To learn more about cryptocurrency value click here.
Top 4 Cryptocurrencies by market cap
Now that you’ve gotten an idea of why the crypto market cap is a vital metric for any investor, let’s take a look at the top 4 cryptocurrencies by market capitalization.
It should come as no surprise that Bitcoin occupies the top spot on this list with a total crypto market cap of around $1.7 trillion at the time of writing. Created by the mysterious Satoshi Nakamoto, Bitcoin is the first successful cryptocurrency in history. Intended to be an inflation-proof currency, Bitcoin has come a long way over the years.
Originally prized by surfers on the deep web and used as the main medium of exchange on the Silk Road, Bitcoin was initially viewed with suspicion by most. However, thanks to the evolution of blockchain technology and changing mindsets, Bitcoin is now the most widely accepted cryptocurrency in the world.
The total number of Bitcoins available is locked at 21 million, meaning that no more coins will be produced once the supply has been exhausted. This was done to make it impossible to flood the market with Bitcoins and thus prevent inflation caused by irresponsible government fiscal policies.
Despite all this, Bitcoin still comes out on top in terms of market capitalization – something that can be attributed to the strong demand for Bitcoin which drove up BTC prices. Thus giving it the largest crypto market cap.
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The silver to Bitcoin’s gold, Ethereum has a market cap of around $165 billion allowing it to take second place. Developed by computer programmers Vitalik Buterin and Gavin Wood, Ether is a digital asset that operates on the Ethereum platform.
Ethereum is a decentralized, open-sourced blockchain platform that offers smart-contract functionality along with a host of other features. It is the most popular block-chain platform and is used in a variety of industries, from medical to finance.
As of this time, there are more than 100 million Ether tokens in circulation with the team opting to not have an upper limit on the total coin supply. Theoretically, this would mean that Ethereum could potentially outpace Bitcoin as the asset with the largest crypto market cap.
Read more about the difference between Bitcoin and Ethereum here.
Developed by Ripple Labs, XRP is the digital currency used on the Ripple platform. The Ripple platform is designed to be a real-time payment settlements and currency exchange system.
Unlike Bitcoin or Ethereum, the team behind XRP claim that the digital asset allows vast quantities of funds to be transferred instantaneously for a fraction of what it would normally cost.
This has made Ripple and XRP a popular choice for fintech and finance companies looking to leverage on the power of new generation technology.
While XRP valuations are not even a fraction of other cryptos, XRP is able to have such a high crypto market cap due to the large quantities of XRP available in the market.
A fork of the original Bitcoin, Bitcoin Cash was developed as a means of solving all of the problems that Bitcoin had.
While blockchain tech allows for funds to be transferred from anywhere around the world, the vast quantities of transactions on an ever lengthening blockchain means that processing times have suffered accordingly.
These turns of events would eventually lead to the development of Bitcoin Cash. Unlike Bitcoin, Bitcoin Cash was specially developed to be scalable in response to the needs of customers. This has allowed for BCH to support faster transaction times whilst still keeping fees low.
With a market cap of around $9 billion, Bitcoin Cash is the 4th most dominant cryptocurrency in the world.
Final thoughts
From increased acceptance to the looming spectre of an economic meltdown, it is clear to see that the future of cryptocurrency is set to be a bright one.
Meanwhile you analyze which crypto to invest, you can rest assured that Tezro keeps your assets safe. Download Tezro app, a fully encrypted app that allows you to exchange cryptocurrencies with complete trustworthy security.
