What Are Cryptocurrency Pairs?

Cryptocurrency pais (crypto pairs) are basically a price comparison of two crypto tokens. The most popular cryptocurrency pair is ETH/BTC, which means you can see how much one Ethereum token is worth in Bitcoin. In other words, a cryptocurrency pair reflects how many tokens you can buy for a certain amount of another token.

Getting to know Cryptocurrency Pairs

Just like traditional currency trading, crypto exchanges rely on cryptocurrency pairs to represent the value of each token .

When crypto assets were introduced as a financial alternative, there were not many crypto pairs available. Most of the trading is related to Bitcoin, as it is the main crypto token. Nowadays, with so many altcoins on the market, new cryptocurrency pairs appear every hour.

Investor Freedom

These crypto pairs allow investors to make smart decisions about the transactions they want to make through exchanges. As more pairs appear, traders have a wider range of transactions to make.

To exchange one crypto token for another successfully, you must find an exchange that supports that cryptocurrency pair, or you must perform several transactions between various pairs to achieve the desired end result.

Lots of Availability

In this case, cryptocurrency pairs reflect the availability of various trading options on a particular exchange. In theory, a trader wants to exchange Litecoin (LTC) for Polkadot (DOT), but the exchange used does not support these cryptocurrency pairs.

This means traders must exchange LTC for Bitcoin first and then exchange that amount of Bitcoin for DOT.

Unfortunately, in this scenario, the trader will have to pay more taxes and fees, due to having to make two different transactions. If the exchange supports the LTC/DOT cryptocurrency pair, the trader will achieve the final result with one transaction.

Medium of Exchange Between Tokens

Cryptocurrency pairs are becoming an important part of the crypto economy, as they allow easy exchange from one token to another. Crypto exchanges recognize the need to support as many crypto pairs as possible to meet traders' needs.

Additionally, some cryptocurrency pairs may offer better trading conditions in terms of fees and taxes. 

What About Unpopular Cryptocurrency Pairs?

Unpopular cryptocurrency pairs among altcoins usually incur more significant trading costs, the most sought after cryptocurrency pairs have proven to be a better choice. However, correlation between different crypto assets can sometimes result in more profitable cryptocurrency pairs for altcoins.

With this in mind, it is important to do research and note the fees and taxes associated with each cryptocurrency pair that investors may be interested in.

Conclusion

Overall, crypto asset pairs are an important foundation in the crypto ecosystem, enabling more efficient exchange of digital assets.

As the market evolves, collaboration between stakeholders will be key to overcoming emerging challenges and building a safer and more transparent financial ecosystem.

Also Read

Understanding Cryptocurrency and How It Works

What Does Coin Mean in Crypto and Examples?

What is an Initial Coin Offering (ICO)?

AI Coin: What It Is and Its Advantages

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.