Learn Academy Crypto investing: Fundamental conceptsLesson 1: What Is the Crypto Market?

Lesson 1: What Is the Crypto Market?

After completing this lesson, you will be able to:

Understand what a market is.

What people mean when they say “crypto market.”

Know what is sold and not sold at a crypto exchange.

Understand specialized crypto markets such as NFT marketplaces.

Understand the relationship between market trends and recognition of bull and bear markets.

Welcome to the first lesson in Kriptomat Academy’s Fundamental Investment Concepts course. In this lesson, we’ll focus on what makes the crypto market a market.

We can begin by agreeing on what a market is

Here’s what the dictionary has to say: “a regular gathering of people for the purchase and sale of provisions, livestock, and other commodities.”
The word can also refer to the place where people meet to exchange goods and services.
It can be a geographical area, like the U.S. market or the Asian market.
It can be a category of potential buyers: the youth market, the student market.
Or it can be the demand for a particular product, as in “The housing market is red-hot!”
It can be an opportunity for selling, like the used car market.
Or the supply or demand for goods and services: the labor market

Some of these definitions are close, but none describes what we mean when we refer to the crypto market. For that, we must find one last definition:

A market is the economic activity in which buyers and sellers come together and the forces of supply and demand determine prices.
The largest market in the world is the foreign exchange market, or “forex”, which is where national currencies are traded by consumer and business banks, investment advisors, hedge fund managers, forex dealers, national banks, and individual investors.
The crypto market is everything associated with the economic activity of buying and selling cryptocurrency, with prices set by supply and demand.

The crypto market is huge

One way to describe a market is to add up the total transactions that take place in a certain period.
In 2021, centralized cryptocurrency exchanges recorded 16 trillion euros of sales and purchases.
Another way to calculate market size is to add up the value of all the goods that are offered for sale. This number varies as prices rise and fall. At its November 2021 peak, the crypto market was worth about 3 trillion euros.
Because cryptocurrency prices sustain large rises and falls in short periods, that market valuation can go up or down by 100 billion euros or more in a single day.

The crypto market does its business over the internet at locations scattered around the world

Cryptocurrency is bought and sold at market rates at hundreds of cryptocurrency exchanges.
An exchange is a website or web service that allows you to exchange one currency for another. For example, you might exchange Ethereum for Cardano.
Cryptocurrency exchanges that abide by strict national and international financial regulations are able to exchange government-issued currencies like euros and pounds sterling for cryptocurrency. They allow you to buy Cardano with euros, for example, or to sell Solana and receive euros

Cryptocurrency exchanges record transfers of cryptocurrency from one location on the blockchain to another

You don’t get a physical coin or token when you buy cryptocurrency.
The transaction is recorded on the blockchain, which is a secure public record of all the ownership transfers for a particular coin or cryptocurrency.
The transaction is recorded as a transfer of a particular amount of cryptocurrency from one blockchain address to another. That information is public. Your name is private, however. It is not recorded on the blockchain. So although transfers are public, they are also anonymous.

Non-fungible tokens are stored on blockchains, but they are not bought and sold at most cryptocurrency exchanges.

NFTs have their marketplaces because the tokens are fundamentally different from cryptocurrencies.
Among the most popular NFT marketplaces are OpenSea, Rarible, and SuperRare.
NFT marketplaces support the purchase and sale of all kinds of non-fungible tokens.
Most do not accept government-issued currency – so you need to buy crypto at a crypto exchange before buying from an NFT exchange.

Crypto exchanges have evolved along with the market

When cryptocurrency was introduced, the first exchanges simply allowed individuals to purchase and store crypto.
As more cryptocurrencies were introduced, investors saw an opportunity to trade cryptocurrencies, much as investors trade dollars and euros on the foreign exchange market.
In response to customer demand, crypto exchanges began adding investing tools like historic price charts, automated buy and sell orders, price alerts, and features to support cost averaging.
Crypto platforms like Kriptomat offer wide selections of investing tools with easy-to-use interfaces and explanations for new investors.

Investing in the crypto market

These days, millions of people worldwide purchase and sell cryptocurrency in the same way they trade corporate stock – and for the same reasons.
Every crypto platform offers charts showing the price history of various cryptocurrencies so investors can take price trends into account when making investing decisions.
Prices can make it easy to see bull (rising) trends and bear (falling) trends in crypto prices.
“Bull” and “bear” are commonly used to describe rising and falling prices, but the terms “bull market” and “bear market” have specific meanings, which we will discuss in another lesson.

So – what did we learn?

The crypto market is the worldwide purchase and sale of cryptocurrencies.
Most crypto is bought and sold at cryptocurrency exchanges.
Each transaction is stored on a decentralized peer-to-peer database called a blockchain.

That’s the end of this lesson! Test your understanding and earn points toward a Kriptomat Academy certificate of achievement by taking the test!

Which of these is NOT a definition of “market”?

A place where people gather to buy and sell.

The protocols and procedures defining the transfer of goods and services.

An economic activity in which supply and demand affect prices as buyers and sellers conduct trade.

A retail shop where goods are sold.

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What are OpenSea, Rarible, and SuperRare?

Cryptocurrencies that run on the Ethereum blockchain.

Crypto investing strategies.

Consensus protocols that are better for the environment than proof-of-work.

Marketplaces for buying and selling NFTs.

The answer you selected is not correct. Please try again.

Which of these is NOT traded at cryptocurrency exchanges?

Blockchain development kits.

Altcoins.

Utility tokens.

State-issued currencies.

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What are NFT marketplaces?

Crypto markets that also sell NFTs.

Not-for-trade markets in which crypto can be bought and sold but not swapped.

Websites and services that allow people to buy and sell non-fungible tokens.

Galleries in New York, London, and other cities where digital artwork is displayed and sold.

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What is a cryptocurrency exchange?

A website or web service that allows you to exchange one cryptocurrency for another.

A cryptocurrency exchange happens when you swap two cryptocurrencies.

A cryptocurrency exchange happens when you swap government-issued money like euros or francs for digital assets like Bitcoin or Ethereum.

A crypto marketplace reserved for licensed and certified professional crypto traders.

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Kriptomat Academy content is informative in nature and should not be considered a personalised or any other investment recommendations or advice.