The term “capitalization” has been greatly distorted with its interpretations over the past few years. The blame is due to the lack of awareness from the majority of users regarding financial transactions. The only correct definition of capitalization is that this word denotes the market value of assets that are in the company’s turnover.
It is also deeply mistaken that the exchange rate of virtual money is often compared with capitalization, although these words are not synonymous. The only similarity of these terms is that both processes directly depend on each other. Many experts argue that capitalization in principle cannot be applied to cryptocurrency for several reasons.
First, it is necessary to take into account the original feature of virtual money. In the process of becoming a “cyber” money, a large number of crypto-assets were simply lost, and it is not possible to determine the exact amount of the loss.
For example, one may recall the case when the only one, or one of several Bitcoin creators, Satoshi Nakamoto, disappeared without a trace, but managed to “grab” with himself not just a little amount, rather million Bitcoins. Do not forget about the numerous cases of hacker attacks that led to the loss of user passwords and the destruction of hard drives on which the information was stored. For the sake of justice, it is worth noting that it was only at the dawn of formation for virtual money. Today’s representatives of the market are much more serious about cryptocurrencies, when the security system of cyber-money has risen to an enviable high level.
Features of cryptocurrency
So, if you still try to capitalize each cryptocurrency separately, then we can note that the results of the calculations will be only superficial. This is explained by the fact that the number of issued altcoins can change permanently, for example, in contrast with the company’s shares that are issued once.
It can be noted that the number of generated crypto-assets is still possible to establish, but to understand whether they really work today or not, is simply unrealistic. Despite this, many analysts unsuccessfully try to calculate the capitalization of virtual money, absolutely mistakenly equating Bitcoin or other cryptocurrency to the shares of companies. Proceeding from this, the phrase “capitalization of the cryptocurrency” is considered only relative, because it has no evidence base.