The crypto market is a collection of exchanges where buyers and sellers meet to trade cryptocurrencies. As with any market, knowing how it functions is important to understanding and profiting from it.
The market for cryptocurrencies is highly volatile and is still largely unregulated. That said, the crypto market has been growing rapidly and will continue to attract new investors. As the crypto market evolves, it’s important to understand the basics of how it works so you can be prepared for future changes.
A cryptocurrency is a digital asset that can be used to store, send, and receive payments. While traditional currencies use national or central banks to process transactions, cryptocurrencies are decentralized and don’t require an intermediary. Cryptocurrency transactions are recorded on a public ledger called a blockchain, which is immutable. This allows users to verify and trace transactions that occur across the network, creating a trustless environment for users to transact without the need for an intermediary.
Like any traded item, a cryptocurrency’s value is determined by supply and demand. The fewer cryptocurrency units available, the higher the price potential buyers are willing to pay for them. Traders can create or purchase cryptocurrency tokens through an exchange, and the purchased coins remain in their digital wallet until they’re sold.
The top cryptocurrencies by market cap dominate the crypto market, but there are thousands of other options on the scene. Tracking market capitalization helps traders identify bull and bear markets, guiding their investment decisions.
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