You can easily denominate your Bitcoin in Ether, USD, Tezos, JPY — any currency you want, fiat or crypto. The almost-$300 billion crypto market cap speaks to the market’s scale.
In addition, you can change your Ripple into USD anytime you want. A connection to liquid assets makes an asset more liquid. You can profit from the inefficiencies that sometimes occur in asset prices — only if you understand how to convert 1 to the other.
Fortunately, the cryptocurrency calculator here will help you see just how much your crypto is worth in your preferred denomination.
First, it’s important to learn how crypto is valued. Not only will it give you leverage in the market today, but it may also expand your understanding of what money is and how you can use it.
How is Cryptocurrency Value Calculated?
The major hurdle for most cryptocurrency critics to get over is how something with no physical presence can have value or be considered money. We’ve been mistakenly driven to believe that money needs some sort of intrinsic value in order to be valuable, but this is not the case. We see this in all kinds of currency, including so-called precious metals.
Gold and diamonds are called precious metals only because access to them is limited in Western society. Gold and diamonds gain the majority of their value only when they are placed in a literal store of value — a jewelry store with high prices and security.
Everyone knows gold watches and diamond rings aren’t cheap. These objects have another store of value — social status. This value has been shown to be constant and stable over time. As a result, gold and diamonds can be exchanged for cash if necessary.
The value of every cryptocurrency is also based on a store of value:
- Bitcoin’s value is being one of the nodes that verifies transactions.
- Ether’s value is in making sure a smart contract is property executed.
- Other crypto holds other stores of value depending on the reason they’re created.
Once you have determined that a cryptocurrency has a store of value, the next step is to figure out how valuable it is. That’s based on the following characteristics:
- Scarcity: In general, rare things are considered more valuable. Bitcoin holds its value partially because of the knowledge there will only be 21 million coins in circulation.
- Mobility: Money needs to be easy to transfer from 1 party to another. A non-physical currency certainly beats paper money in this regard.
- Durability: Money that degrades cannot be used efficiently. Digital currency on a blockchain retains perfect durability as long as there is a system of connected nodes. In the case of a decentralized currency, every single node would need to be eliminated in order for the currency to erode.
- Utility: Currency must be useful for reliable trade. Because cryptocurrencies are an efficient representation of a process or function, they have a natural utility for anyone who values that function.
- Divisibility: Crypto has ushered in new levels of divisibility, and with it, new flexibility. It’s safe to say that Bitcoin would have a much lower volume if it weren’t divisible into 100 million satoshis. Crypto has also ushered divisibility into traditional trading platforms. Most upstart platforms like Robinhood and Webull offer fractional shares in stocks as well.
- Non-counterfeit ability: Currency must be hard to forge so that its supply cannot be manipulated. Crypto built on cutting-edge blockchain technology is literally impossible to forge, which gives it an edge on paper currency.
Which Crypto Exchange is Best?
The exchange you choose can make a difference in your portfolio value. The crypto market is unregulated, which means that literally anyone can create an exchange for cryptocurrency. Some of these exchanges choose to cooperate with traditional regulatory bodies like the SEC, centralizing their operations and requiring users to identify themselves. These exchanges usually have lower fees, higher liquidity and faster execution than decentralized exchanges (DEXs).
A DEX offers you a relatively high degree of anonymity and some offer full anonymity. The disadvantage is that users have no recourse if a trader cheats them.
The exchange that is best for you depends on the feature set you want. Here are some of the largest exchanges to inspire you.
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Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
- New cryptocurrency traders
- Cryptocurrency traders interested in major pairs
- Cryptocurrency traders interested in a simple platform
- Simple platform is easy to operate
- Comprehensive mobile app mirrors desktop functionality
- Coinbase Earn feature rewards you with crypto for learning about available coins
- Higher fees than competitors
Having a strategy is half the battle. Choosing an efficient system of execution is the other half. Take a look at top brokers for cryptocurrency to give your trading the best chance of success.
Convert Currency into Value
Crypto is valuable to different people for different reasons. You may not value crypto as a technical breakthrough but major coins are almost as useful as fiat currency in mainstream commerce. You may derive value from smart contracts and investing anonymously in cannabis legalization efforts, which will affect your investment decisions. Learn to use conversion rates and arbitrage to increase your portfolio’s total value and you’ll have more value to trade when the time comes.