How is NAV on the basket of cryptocurrencies calcuated? - letsdiskuss
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राहुल ओबरॉय

Engineer,IBM | Posted | News-Current-Topics


How is NAV on the basket of cryptocurrencies calcuated?





fitness trainer at Gold Gym | Posted


Let’s understand one thing—you cannot put all virtual currency in the same basket. There are several

distinctions between them—some are centralized, others decentralized; some process transactions very

fast, others lag.

Let’s take an example here—Bitcoin and Ripple. Bitcoin is finite in number (21 millions). However, the

supply of Ripple is infinite (at least for now).

Now coming to your exact question, the value of virtual currencies largely depends on the demand and

supply. It’s basic economics! If something is limited in supply, its demand will be high. And when its

demand is high, so will be the price. However, if something has unlimited supply, its demand will be

relatively low, and so will be its price.

So, thanks to limited supply, Bitcoin is highly demanded. So its price is skyrocketing, touching nearly

$20,000 in the first half of December. People want more Bitcoin, so they are ready to pay more for the

units.

On the other hand, ripple has unlimited supply. So per unit, its value is less than $3.

Of course, on this scene, many factors come into play. But at the end, they all influence demand and

supply, which then sways the fate of these virtual currencies.

Same theory is applicable for all cryptocurrencies, be it Bitcoin, Ripple, Ethereum, Bitcoin Cash, IOTA,

and more.


Letsdiskuss


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