These are very important terms to know please read them carefully…
Intro
I want to make this as easy as possible for anyone who wants to get into the crypto world or is already in the crypto world but doesn’t know how to decide whether a specific coin is safe/good to buy or not.
Here are the 5 Things You Must Know Before Buying Cryptocurrencies.
- Market Cap
What is the Market Cap?
The Market Cap of any coin is simply how much money is in that coin.
That means if a coin has a Market Cap of 10,000 USD and you buy with 5 USD, the Market Cap will be 10,005 USD. Simple right?
Market Cap = Current Price x Circulating Supply.
- Volume
What is the Volume?
The Volume is exactly like the Market Cap, the only difference, and it is not really a difference, is that it shows you how much money was put in the coin in the last 24 hours.
Note: Some sites use the term Volume instead of Market Cap.
- Circulating Supply
What is the Circulation Supply?
The Circulating Supply is the total of the coins that are in the market or in the public hand (like you and me).
- Max Supply
What is the Max Supply?
The Max Supply is the number of coins that will ever exist in the lifetime of the Cryptocurrency.
Bonus tip: if a coin has a Maximum Supply it is going to be safer to invest/buy that coin. (Of course, there are a lot of things when it comes to is the coin is safe or not, so don’t just judge only by the Maximum Supply)
- Total Supply
What is the Total Supply?
The Total Supply is the number of coins that have been already created, minus any coins that have been burned.
Let’s take an example:
Market Cap = Current Price x Circulating Supply.
As you can see in the formula above the market cap is decided by the current price times the circulating supply, which means if a coin has a small circulating supply and a big market cap the price of the coin will be high.
For example: let’s say a coin has a market cap of 1,000,000,000 USD and the circulating supply of the coin is 1,000,000 which means that this coin’s price will be = 100USD. (1,000,000,000 USD / 1,000,000 = 100 USD)
if you want to give it a try and analyze go ahead to CoinMarketCap
Thanks for reading I hope you enjoyed reading 5 Things You Must Know Before Buying Cryptocurrencies
Want to read more about cryptocurrency? Check out my last article on What Is Cryptocurrency And How Does It Work?
If you have any questions please write in the comment section.
