In the crypto industry, a benchmark is a measurement standard used to evaluate the performance of a particular asset or investment compared to others.
A benchmark is an inherited term from the financial sector. It represents an instrument of comparison used as a point of reference to measure the performance of a particular asset, portfolio, or strategy. Using a benchmark, a trader can plan his/her long and short-term goals.
A popular example of the crypto benchmark is the performance of Bitcoin, as it is considered the most widely adopted and established cryptocurrency, and many other crypto assets are often measured against its performance.
Additionally, various crypto indexes are used as a benchmark for the crypto market in general, tracking the performance of the top cryptocurrencies by market capitalization, such as the CryptoCompare Digital Asset 10 Index (CCi30).
Benchmarks can be applied to crypto, tokens, and smart contract performances in the crypto industry.
In the future, the perspectives of benchmarks in the blockchain sector could broaden the horizons and include network scalability and speed, level of decentralization, and the efficiency of different consensus mechanisms.