A token priced at 1 $ n is not necessarily cheaper than a token priced at 1 000 $ Let’s consider two cryptocurrencies.
One costs $1.
The other costs $1,000.
Which is cheaper?
Most people immediately think:
“Obviously, the $1 token.”
But in the world of cryptocurrencies, that can be completely wrong.
The price of a token tells you practically nothing about the project’s overall cost.
What really matters is the number of tokens in circulation and the value the market assigns to them.
Let’s simplify things.
Imagine that cryptocurrency A trades at 1 $ and that there are 100 billion tokens in circulation.
Its market capitalization would be:
100 billion dollars.
Now imagine that cryptocurrency B trades at $1,000, but there are only one million tokens in circulation.
Its market capitalization would be:
objective so simple.
enter into circulation via unlocks, rewards, or other emissions.
One costs $1.
The other costs $1,000.
Which is cheaper?
Most people immediately think:
“Obviously, the $1 token.”
But in the world of cryptocurrencies, that can be completely wrong.
The price of a token tells you practically nothing about the project’s overall cost.
What really matters is the number of tokens in circulation and the value the market assigns to them.
Let’s simplify things.
Imagine that cryptocurrency A trades at 1 $ and that there are 100 billion tokens in circulation.
Its market capitalization would be:
100 billion dollars.
Now imagine that cryptocurrency B trades at $1,000, but there are only one million tokens in circulation.
Its market capitalization would be:
objective so simple.
enter into circulation via unlocks, rewards, or other emissions.