Remember folks it is the BTC value and not the DOLLAR value that you want to focus on with Cryptos
The month of July we saw all sorts of fluctuations and all time lows for a lot of the coins in the market. What I mean by all time low in value, is the BTC value, not the dollar value. So it is important to look at your coins you have and want to buy and focus on the BTC value, not the dollar amount.
The reason BTC value is more important is because for now just about every single cryptocurrency is bought using Bitcoin. Just about every single crypto in the market cannot be bought using fiat and most exchanges do not have a an option to buy into the market using a credit/debit card.
Also another factor is referred to as the "Bitcoin dominance" in the market. If you go on exchanges like Poloniex or Bittrex for example you will see that you have the option to buy cryptocurrency using BTC, ETH, or USDT. Of those 3 mentioned you will notice BTC has the more variety of crypto coins to buy. Also the coins you can buy with ETH or USDT , you can use BTC to buy those as well
Quick side note: USDT stands for US Dollars Tether. Also referred to as Tether on some exchanges. This is NOT SIMILAR to USD (US Dollars). So make sure you never transfer USDT to a USD account between exchanges.
Back to why you need to track the value of your cryptos by BTC. The entire Crypto Market is approximately at this time worth $100 billion dollars. With bitcoin dominating this entire market with approx. $45 billion dollars of that $100 billion belonging to BTC
So here are a few quick examples with made up values I have, to make the math more easy to understand the concept.
First of lets say the following coins are worth the following in US Dollars:
1 BTC = $100
1 ETH = $50
1 LTC = $20
Now lets convert ETH and LTC to BTC., which is what these coins values are converted to on most trading exchanges
1 BTC = 1.00000000
1 ETH = 0.50000000
1 LTC = 0.20000000
Scenario 1:
Lets say market is doing well and BTC doubles in value. Therefor the 3 coins US Dollar values would be :
1 BTC = $200
1 ETH = $100
1 LTC = $40
The BTC value for the coins would still stay the same
Scenario 2:
Lets say the market has another great day , especially for LTC and ETH which doubled in price. However BTC just stayed around the same value. Based off the initial values I listed the new values would be:
US Dollar value
1 BTC = $100
1 ETH = $100
1 LTC = $40
Since in this example I mention that ETH and LTC did well, then their BTC value would change since people bought more ETH and LTC using BTC as the currency to buy it
1 BTC = 1.00000000
1 ETH = 1.00000000
1 LTC = 0.40000000
Scenario 3:
Lets say the market crashes really bad however the only coin that actually does really well is BTC and it doubles in US Dollar value. However ETH and LTC end up decreasing in BTC value by 25%.
Looking at the charts for US Dollars
1 BTC = $200
1 ETH = $75
1 LTC = $30
BTC Values
1 BTC = 1.00000000
1 ETH = 0.37500000
1 LTC = 0.15000000
Now looking over the 3 scenarios above, the 3rd scenario was pretty similar to what happened the last few days of July. BTC when up a lot in dollar value, however the BTC value of the altcoins were dropping. So the the average crypto investor or new person who is just getting involved in cryptos would go to coinmarketcap.com and see that ETH and LTC actually were worth more than his or her initial investment. Since compared to the baseline of my example I had ETH at $50 and LTC at $20 dollars.
However if you compare the BTC values ETH and LTC in this scenario you will notice they are worth LESS in BTC than before.
So realize as it is for not at least, that when referring to fiat(or US Dollars) that it really only applies to Bitcoin at this time. Since just about any exchange the way to buy in to get into the market is buying Bitcoin.
Bitcoin = Cash $$$$$
Altcoins like LTC and ETH, though they can be bough by cash on some exchanges, the option to buy them using BTC is a lot more popular. Along with the reasons I explained about BTC Dominance in the market...
Altcoins = BTC Value
BTC will always stay constant in BTC value(not constant in fiat value) since its units are BTC. So you buying 1 BTC will always be 1 BTC. But the beauty of altcoins is that their units are primarily based on BTC value. And because they are based on that, the individual altcoin's have the ability to grow like a plant in how much it's value is worth in BTC over time
Upvoted and re-steemed! Thank you for the post- I had not thought of the crypto's in this way vs the US dollar.
No problem, and thank you for taking time to not only read but re-steeming it. Yea it takes a quick minute to get to use to the BTC value once this perspective is brought up. However it will help make money in the end. I still have to even get the math down on the trade fees. FOr example BIttrex charges 0.25% per sell of any coin . I believe that is what it is. Also there is aother small fee when buying as well. Have to take into consideration how much that is when you are trying to sell to make a little profit, especially if the amount of coins is not that high and they are not worth more than a dollar.
Thank you soey
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thank you
Still very helpful!
What a stupid Article. Bitcoin is nothing more than a digital Ponzi Scam
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Did anyone here already aware of this? An exchange is now having an anniversary and would be giving away btc. This is until October 1st! https://www.kucoin.com/#/anniversary/overview