Let's talk about Market Capitalization and how to evaluate this data when choosing a cryptocurrency to invest in.

To know the market capitalization of a currency, it is necessary to keep in mind that there is an exact number of currencies in circulation. Each unit of this currency is given a price, and multiplying the total number of currencies in circulation we will have the market value of the asset.

Ok... you already understand that to know if any currency has value you need to know how much of it is available in the world and based on a basic law of economics (supply and demand) we conclude that the more units of that currency we have in the world, the cheaper it tends to be. to be.

Rare is always more expensive.

Alright Bôto, now show me how to discover this in practice:

1st To put this into practice, we must be aware that cryptocurrencies are being produced (mined).

Even $BTC didn't reach its total. Today there are around 19.5 M BTC in circulation, when we know that the pre-defined total limit is 21 M.

The 2nd point to keep in mind is that whoever has the coin can say how much it is worth, after all, you want to buy it because it has some value, right? So when this total of coins reaches 100%, a greater appreciation is expected after all: production has stopped and only what is on the table is at stake.

Of course, the market will adjust and new currencies will emerge, but not for their unit value, but for the associated services; for example, a store that accepts $XRP or $ETH in its payments makes these currencies appreciate in value.

To conclude this first part, I summarize a moral here: new coins, recently launched, may seem cheap in price, and this makes you believe that you have a large number of them. But in comparison to the number of them on the market, could you say how much % of their launch they achieved? 100%? 95%? 50%?

I'll show you this in the next post - PART 2

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