I has some newbie crypto friend keep asking me about this so I try to explain and repost it here.
Here's one example.
To start, 1 Bitcoin = $10,000
In this scenario Bitcoin starts at $10,000 and then rises to $15,000, a 50% gain.
Both people start with the same value. USD guy starts with $10,000. BTC guy starts with 1 Bitcoin.
USD guy starts with $10,000, trades ALT/usd pairs, and makes a 50% profit. He now has $15,000. He's happy and thinks he did well. But, he can still only buy one bitcoin because it also gained 50% to $15,000. He now has $15K or 1 bitcoin.
BTC guy starts with 1 bitcoin. He trades ALT/BTC pairs, and makes the same 50% profit. He now has 1.5 Bitcoin, which is now worth $22,500 USD. He now has 1.5 Bitcoin or $22,500 USD.
Both traded well and made 50% profit, but the BTC guy has $7,500USD/.5 BTC more than USD guy.
thanks for your basic lesson Here's one example.
To start, 1 Bitcoin = $10,000
In this scenario Bitcoin starts at $10,000 and then rises to $15,000, a 50% gain.
Both people start with the same value. USD guy starts with $10,000. BTC guy starts with 1 Bitcoin.
USD guy starts with $10,000, trades ALT/usd pairs, and makes a 50% profit. He now has $15,000. He's happy and thinks he did well. But, he can still only buy one bitcoin because it also gained 50% to $15,000. He now has $15K or 1 bitcoin.
BTC guy starts with 1 bitcoin. He trades ALT/BTC pairs, and makes the same 50% profit. He now has 1.5 Bitcoin, which is now worth $22,500 USD. He now has 1.5 Bitcoin or $22,500 USD.
Both traded well and made 50% profit, but the BTC guy has $7,500USD/.5 BTC more than USD guy.
