What is the Deal With the Coinmarket?
Why are there so many people who want to invest in a particular type of Cryptocurrency? Why do we hear about so many brokers and traders who are eager to get into this business? What does it take to enter the world of Cryptocurrencies? How can we tell if something is a good buy or not? These are just some of the questions you may be asking when you are planning to make an investment into Cryptocurrencies like Litecoin, Zcash, or Dash among many others.
Answer: A cryptocoinologist studied the performance of thousands of different Cryptocurrencies listed in the Coinmarket index, a site that monitors by current market capitalization how each of these coins are performing. The analyzer noticed that out of all of the coins published on the Coinmarket, nearly half (nearly 47%) performed better than the last year, nearly half performed worse than they did in the prior year, and the rest did not perform at all. It was a rather interesting revelation because it shows that the marketplace is very fragmented as well as not particularly regulated. In fact, there are no standards in which the various cryptos can be assessed.
This fragmentedness has lead to inefficient exchange houses which have been unable to capitalize on the rapid growth of Cryptocurrectains like Litecoin and other newcomers. With poor performance, these kinds of exchanges are being forced to seek out a more reliable partner that can perform the service for them. And just like the financial sector, they’ve finally resorted to partnering with token-based companies and exchanges such as those who work with Cryptocurences such as the Coinmarket itself.
The partnership has given rise to what we know today as the Coinmarket. The coin market is essentially an aggregator of all coins. Some examples include Peercoin, Dogecoin, Litecoin, and a host of lesser-known cryptographic currencies. This huge pool of currencies makes the market vulnerable to outside influences, much like the stock market is prone to. For instance, someone could control a significant amount of Dogecoin and force the market price to rise dramatically, which could ultimately make for a disastrous outcome for many smaller and coins.
Fortunately, however, the Coinmarket is taking steps to address some of these issues. At present, there are several software programs that are analyzing the marketplace and attempting to determine where the profitable trades are coming from. This is important because if the market is going to stay intact and maintain its previous highs and lows, as is expected, then the profitability of most cryptic will continue to skyrocket due to easy accessibility and low margin requirements.
This also highlights the importance of using the correct platform when trading in the Coinmarket. The major three exchanges, Gemini, Poloniex, and the London Metal Exchange, or LGX, are not yet equipped with the necessary resources to allow them to provide liquidity to all of the currencies in circulation. They remain, instead, confined to working with just a few select currencies, namely those derived from the popular bitcoin protocol. Furthermore, even though the linchpin of this service, the bitcoin block, remains operational, it does not have the same level of exposure to external influences as other exchanges do. This means that despite the recent volatility in the market, the exposure to bitcoin remains limited.