As you start your journey in the cryptocurrency universe, having a basic understanding of what cryptocurrencies are is just the first step.
You also need a framework to identify the different types.
While the space is filled with various coins and tokens, for the purpose of this guide, we will focus on a practical method to differentiate them: their market capitalization.
This is a fundamental concept used by investors to assess size, risk, and maturity.
Big Cap Coins & Altcoins
So, what exactly does that mean?
Most investors in this space break up the coins into two major groups… Big Cap Coins & Altcoins.
Big Cap Coins are generally referred to as coins with a market cap of $10 Billion or more.
Moreover, these big cap coins are usually well established… they’ve likely been around for a period of time… they generally have large following & social media support.
Want more information about crypto coins?
Check out this guide explaining what coins are.[LINK: WHAT IS A COIN]
As of this writing, Bitcoin & Ethereum are the leaders of the pack of the “Big Boys.”
What Is Market Cap?
You might be asking yourself, what is market cap?
Market Cap or Market Capitalization is “the market value at a point in time of the outstanding shares, being equal to the share price at that point in time, times the number of shares outstanding.”
If that sounds like a bunch of “bunk” to you, I’m sure you’re not alone!
The bottom line is, the market cap is used by the investment community to rank the size of companies. In crypto, it’s the single best tool for quickly understanding a project’s scale and dominance.
Altcoins Are Pretty Much Everything Else
Like the title of this paragraph reads… altcoins are pretty much everything else.
Generally speaking, they have a market cap that is less than $10 Billion.
They are often built “on top” of other platforms. These are tokens… you can learn more about tokens here.[LINK: WHAT IS A TOKEN]
These tokens can usually be purchased for a lot less money because they generally come with much more risk.
However, with this increased risk, often comes the opportunity for high returns on your investments.
But realize, it doesn’t mean it will!
Your Homework
So, it’s time to do a little bit of homework…
Yes, I said it, do your homework.
Remember, you are responsible for you and your investments… you are responsible for your success and failure.
