How are cryptocurrencies priced on popular trading platforms?

One of the logical questions that any rational person might ask is how cryptocurrency platforms and services can price their digital currencies. We even find a lot of differences between the prices of cryptocurrencies on many platforms. In fact, a group of people made good profits just by switching between currencies from one platform to another.

And get a profit in the difference between the price of the same currency! How could this really happen? Today we will explain to you some of the basics that you should know about pricing cryptocurrencies, how the price of a specific currency is calculated first.

Then we will tell you how a trading platform or quotation platforms calculates the price of its cryptocurrencies. Then finally, why is there a difference in currency prices between these platforms?

How is the price of cryptocurrencies determined? 

General? How is the price of a digital currency originally calculated? Understanding this element first will help you understand how it is priced on other platforms.

The price of any digital currency is a simple calculation. We take the amount of money invested in this cryptocurrency (whether whales or small investments, including yours), and it is called the market capitalization value. It is then divided by the largest value that the currency can absorb, which is called Max Supply.

The output is the price of the cryptocurrency. As an example, let's take Ethereum, its Market Cap is $493,892,724,498, and its Max Supply is 118,111,823. The quotient of these two numbers is 4,181.57, which is the current price of Ethereum.

Why does the price of cryptocurrencies vary on trading platforms? You may find that the price of cryptocurrencies on purchasing or trading platforms may vary slightly from one platform to another. There are many reasons that cause prices to differ between platforms.

Here are the most important and most influential ones as well. The diversity and multiplicity of sources for obtaining the currency price. If you think that each platform calculates and reviews its own currency price on its own, then you are wrong, except for a few platforms. Or rather, famous platforms such as Binance, CoinEx, and others have their own price calculation system.

However, the rest of the platforms depend on what is called an API. It is taking the price from another approved platform, such as the Trading View platform. Such as the CoinMarketCap or Coinbase platform, which rely on TradingView pricing and calculations.

Its equivalent in the field of Forex trading is the MetaTrader platform, which communicates directly with stock exchange prices. The commission that the platform deducts before calculating the price. We explained that one of the most important controls on the price of any digital currency is the Market Cap, and the Market Cap, or market capital, is an amount collected from all existing investments in a specific cryptocurrency. When someone buys $1,000 of Ethereum, this leads to an increase in the Market Cap and then the price of Ethereum changes (the same as for the selling process).

All sales that occur in a few seconds before the market capitalization are confirmed are aggregated. In the collection process, each platform, such as Binance, KuCoin, and others, deducts its own commission. Therefore, because the commission varies, the price does not appear the same on all platforms for some time.

However, it is quickly corrected just seconds later. Weak servers and servers Then the last problem that may make some platforms show a different price than other platforms, is the weakness of their servers and servers, which generally affects the price. While popular platforms with powerful servers (again, such as Binance) can show you changes in a fraction of a second due to the strength of their servers.

Other platforms take some time (as little as seconds)  in order to reflect the changes. You will mostly encounter these problems on beginner platforms, or relatively weak trading platforms.

Otherwise, the price between trading platforms is mostly the same, very close, and even if there is any difference, it is corrected in just seconds.