Unlike the U.S. dollars in your wallet, or some other currency all over the world, digital currencies aren’t backed by a central bank or even a government.
There is also no tangible fundamental factors with which to help derive an appropriate valuation. Whereas you can go through the earnings history of a publicly trading stock to estimate its worth, or the economic performance of a nation regarding GDP growth to value a currency such as the dollar, digital currencies haven’t any direct fundamental ties. Top Cryptocurrency Facts You Should Know. This makes valuing cryptocurrencies in a traditional sense especially difficult, or even impossible.
Inspite of the increased exposure of trading virtual currencies, it’s actually what underlies cryptocurrencies that would be particularly valuable.
Blockchain technology may be the infrastructure that cryptocurrencies like bitcoin are founded on. It’s a digital and decentralized ledger that records payment and transfer transactions in a safe and efficient manner. It is also the big reasons why big businesses are very excited.
If you’ve been following a appreciation of virtual currencies, you’ve probably heard an awful lot about bitcoin — and with good reason. It absolutely was the initial tradable cryptocurrency that was brought to market, and it currently comprises 54% of the aggregate $589 billion market cap of most cryptocurrencies.
However, it’s not even close to alone. There are more than 1,300 other virtual currencies that investors can buy, that over two dozen have a market cap that’s in excess of $1 billion.