Cryptocurrencies: What to Look For

//Cryptocurrencies: What to Look For

Cryptocurrencies: What to Look For

Cryptocurrencies use a number of different algorithms and are traded in different ways. Here are the main characteristics that you should consider.

Market Capitalization and Daily Trading Volume
liteCoinA cryptocurrency’s market capitalization is the total worth of all coins currently in circulation. A high market capitalization can indicate a high value per coin or simply a lot of available coins. Perhaps more important than market capitalization is daily trading volume: the value of the coins that exchange hands every day. A high daily trading volume relative to the market capitalization indicates a healthy economy with many transactions.

Verification Method
proof of workOne of the major differences between cryptocurrencies is their verification method. The oldest and most common method is called proof of work used also by DinastyCoin. To gain the right to verify a transaction, a computer has to expend time and energy solving a difficult math problem. The trouble with this method is that it requires a massive amount of energy to operate.

Proof-of-stake (for example clubcoin) systems attempt to solve this problem by letting the users with the largest share of the currency verify the transactions. These systems require less processing power to operate and claim faster transaction speeds, but concern over security means that few coins use an entirely proof-of-stake-based system.

Retailer Acceptance
A cryptocurrency isn’t much use if you can’t buy anything with it. That’s why it’s important to know who accepts a currency before you invest in it. A few cryptocurrencies are widely accepted, even boasting partnerships with major retailers. Most, however, have more limited acceptance, and some can only be exchanged for other cryptocurrencies. Some coins simply aren’t designed to be exchanged for goods and are built for other purposes.

Cryptocurrencies are an exciting new development in the world of finance. No one is quite sure yet where the technology will lead, but the fact remains that these new currencies offer possibilities that traditional cash can’t.

 

By | 2016-12-07T22:35:09+00:00 April 26th, 2016|for beginners|3 Comments

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3 Comments

  1. jokers June 11, 2016 at 9:01 am - Reply

    Questo articolo deve essere letto molto bene…. capendo esattamente quello che ci sta comunicando…. la realtà dei fatti di oggi

  2. nat13 March 26, 2017 at 11:42 am - Reply

    e molto bello capire la criptovaluta

  3. John July 11, 2018 at 4:35 am - Reply

    Thanks for the great info!
    Cryptocurrency market is very fast and very frequent to change. Therefore, it is important to learn everything before you start trading bitcoin, Ethereum or any other cryptocurrency.

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