Greetings existing protocols so to speak. I want to render my gratitude and appreciation to @fredquantum for enlightening verified kids in this vaunted community. Last lesson helped me understand some cryptocurrencies and their advantage in the capital market. This lesson is centered on how ranking is done in the crypto ecosystem. Before answering Those assignment questions as usual, I will explain the terminologies involved and spotlight some key words. The keywords involved are;
- Crypto Ecosystem
- Market Capitalization
- Ranking [assets]
Crypto Ecosystem involves several elements interacting with each other such as miners and users for creating an environment for specific features, purpose and the likes. This interaction is done through transactions. We have different crypto ecosystems which include; Tron, Ethereum, EOS, Stellar and the likes.
Market Capitalization is the total value of mined coins or crypto assets. It measures the market value of a crypto currency and also keeps track of the value or size of certain crypto assets in the capital market.
Ranking [assets] is the act of grading or giving relative positions to cryptocurrencies. Every cryptocurrency has its rank which is the position its occupies in the capital market which is evaluated or calculated by its market capitalization. After highlighting those terms, I've come to an understanding of what the whole concept mean..
Question 1
Market Capitalization as regards crypto ecosystem is the measurable or total market value or size of a crypto currency. It is also the total value of mined coins. In summary, it is the calculated or total value of a cryptocurrency. It is calculated by multiplying the price of a cryptocurrency with the number of coins used in circulation. To investors, market capitalization is used to determine how much a company is worth and knowing the worth or value can enables them know how risky it is to invest in such a company. Market Capitalization is important because it enhance understanding of investors as to the size or worth of one company over another.
In my own understanding, current price is the recent selling price if a currency or commodity at a given point in time. It indicates current value and serve as criterion for buyers and sellers..
Circulating supply refers to the total number of coins available for trading/ circulating in the capital market. It affects the price of coins by reducing it.
How is Market Capitalization calculated?
To calculate market capitalization, current price and circulating supply is vital as it would be multiplied to give rise to the market capitalization value which determines its rank. We use this formula to calculate market capitalization.
MC = CP × CS
E. g: If PET is trading at 10 USD and the circulating supply is 40, 000 PET, using the formula, we have our MC to be
MC = 10×40,000 = 400,000
Question 2
Current price: $19.23
Circulating supply:1013783832.16932
Market Capitalization: 19,495,063,092.6162
Name of asset= Polkadot DOT
https://coinmarketcap.com/
19.23 ×1013783832.16932 = 19,495,063,092.6162
Therefore, the market capitalization for the polkadot = 19,495,063,092.6162USD
Conclusively, I've come to have a clear understanding of the whole concept of market capitalization and the rest. Thanks to @fredquantum for organizing and to @steemkidss for motivating us.
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