What is diluted market capitalization?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let us explain diluted market capitalization, a term any crypto investor should understand.

But first, jump back one episode where we explain market capitalization itself. A cryptocurrency’s market capitalization is the total amount of money in circulation of that cryptocurrency. Let’s take Bitcoin as an example. Currently priced at around $30,000 per Bitcoin, there are 19 million of them. In total they are worth 590 billion dollars.

That’s a lot of money, but it doesn’t actually include all of the possible Bitcoins. Eventually, there will be up to 21 million Bitcoin in circulation. The difference, a whopping 2 million, is just being held back as rewards for those operating the network, also called miners.

Fully diluted market capitalization refers to the theoretical value of all possible Bitcoins in circulation. If you add those 2m yet-to-be-mined coins to the market cap, you get a total diluted market cap of 650 billion at the current price, a 60 billion US dollar difference.

Head buzzing? Let’s recap. Market cap refers to all the actual money that is currently floating around in a cryptocurrency. Fully diluted market cap is the higher, theoretical value of the maximum possible number of coins.

And in the next episode we’ll explain why the inventors of Bitcoin set a limit at 21 million of them and how you could get some of the ones being held back today.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.