Part18 - US content creation for blocktrades_US

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Ledger

A data store, intended to be "append-only" meaning new records can be added but cannot be edited or deleted, thus creating data immutability, most often consisting of records holding financial information, but can also include other types of data.

The word Ledger also refers to the manufacturer of the cryptocurrency hardware wallet "Ledger Nano" and the associated software package "Ledger Live".

Limit Order Book

On an exchange, at any given market pair, exists a Limit Order Book consisting of a list of "limit" orders, each at a certain price and amount and ordered by price, that you can choose to accept to trade with. A market pair is defined by a Base and a Quote Asset, for example BTC/USD, in which Bitcoin is the Base asset and the US Dollar is the quote asset.

In this specific market pair, which is found on many cryptocurrency exchanges as Bitcoin is the first / original cryptocurrency and the US Dollar is currently considered to be the world's reserve currency, Bitcoin holders that aspire to sell some of their Bitcoin holdings can add their limit sell order to the Limit Order Book called an "Ask", and those wanting to buy Bitcoin in exchange for their US Dollars can place their limit buy order to the Limit Order Book called a "Bid".

The difference between the highest bid and the lowest ask is called the "Spread", and often described mathematically in the form or a percentage ratio, as follows: (lowest ask - highest bid) / lowest ask.

By placing a new limit order, a trader is said to "add liquidity" to the Limit Order Book, also referred to as a "Maker". A limit order can in some ways be considered as a "trading proposal", where the act of placing a limit order in and by itself does not lead to an actual trade. In order for such a trade to occur, a so-called "Market Order" is needed, also called a "Taker": a market order can be perceived as "accepting a trade proposal" and "takes away" liquidity from the Limit Order Book.

In thinly traded market pairs, often having low liquidy and especially low trading volume, the spread is often relatively large: there exists a large difference in the lowest ask price and the highest bid price. A trader could decide to buy from the asks side of the Limit Order Book by placing a market order (which could be too high), or a sell from the bids side (which could be too low). Or, instead, a trader could add a limit order at a more realistic price, but with the potential of not getting filled soon or at all, in case of high price volatility in the other direction.
And in high volume markets, especially at times of high volatility, trades can happen so fast that it's almost impossible for a human trader to place a limit order, and in case of placing a market order at such high volatility and trading volume there exists the risk of a market order getting filled either way too high (in case of a buy) or too low (in case of a sell).

Using the BlockTrades cryptocurrency exchange services you don't have to worry about these exchange trading difficulties associated with Limit Order Books: instead, you trade directly with BlockTrades at an accurate price approximation prompted to you in advance, and with a guaranteed (maximum) transaction amount at said given price. If all goes well, we send to you the desired token amount directly to your own wallet.

Liquidity

A market pair's liquidity, in which asset X (the "base asset") can be traded against asset Y ("the quote asset"), refers to the amount of immediate asset availability to be converted / traded / exchanged at a given point in time, without drastically affecting both market prices and underlying market cap, or even worse, to completely eliminate any available limit order asks and/or bids contained on an exchange's order books.

Thinly traded assets, those with (very) low daily transaction volumes, are said to be illiquid; it's then impossible, on that exchange's market pair, to exchange assets at a volume larger than the order book depth.

Market cap / Market capitalization

As is the case with traditional asset, or company, valuation, a cryptocurrency's market cap is the total value of that specific cryptocurrency. In order to compute a cryptocurrency's market cap, you multiply the (spot) price of one token by the amount of total circulating tokens in existence.

One potential pitfall with the above definition of market cap to determine value, fails to deal with the fact that "order book liquidity" also plays an important role in one's ability to buy or sell a large amount of tokens without directly impacting, via that individual transaction, both the price and conversely the market cap of the corresponding cryptocurrency. To illustrate this problem, consider the following hypothetical example in which a given cryptocurrency currently consists of 1 billion tokens currently priced at 0.001 USD, thus leading to a current market cap of 0.001 USD * 1,000,000,000 = 1 million USD. If one single buyer seeks to buy for example 1 million of said tokens, but he desires to make said purchase using a (centralised) cryptocurrency exchange with a current limit order book depth at which, at increasing sell asks, only 1,100,000 tokens are being offered for sale, of which the highest ask is priced at 0.10 USD, then such a single large buy would -a- push up price to 0.10 USD (in this example price goes up by a factor of 100), and so would the corresponding market cap; that one hypothetical buy order at which for example only 5,000.-- USD was used, would alter the market cap from 1 million USD to 100 million USD.
A similar example can also occur in the opposite direction, the scenario where one large token holder wants to sell tokens at a volume the limit order book depth cannot handle, causing a crash of price and market cap.

To avoid such unwanted change of price and market cap usually caused by large transactions, BlockTrades offers a direct exchange service via our web site.

Market Dominance

A phrase often used in relation to Bitcoin's total market cap in relation to the market cap of all cryptocurrencies including Bitcoin combined. When the Bitcoin market cap is going down decreases, this often means that the market consisting of all altcoins combined is rising in price and increasing its total market share within the entire set of cryptocurrencies.
In case many altcoins are rising in price and value, combined with a decreasing Bitcoin market dominance, such a period is often referred to as "alt season".