NVT Ratio

The Network Value to Transaction Ratio is one way to establish the value of a cryptocurrency that was created by researched Will Woo. You take the market capitalization of the network and divide it by the volume transmitted on the blockchain of that cryptocurrency (transaction value).

It is similar to the Price-Earnings Ratio (PE Ratio) used in traditional stock markets. The latter measures the ratio between the share price of a company and its equivalent earnings per share. In the world of Bitcoin, you can substitute earnings with the amount of money flowing through the network. Bitcoin is a network used for payments and storing value, and the amount flowing through it is closely tied to its evaluation.