Cryptocurrency supply: decoding max, circulating, and total supply

Cryptocurrency Supply and Its Impact on Value and Scarcity

Table of Contents

• What is Cryptocurrency Supply?

  • What is Max Supply in Cryptocurrency?
  • What is Total Supply in Cryptocurrency?
  • What is Circulating Supply in Crypto?
• Total Supply vs. Max Supply
• Circulating Supply vs. Token Supply

What is Cryptocurrency Supply?

Cryptocurrency supply refers to the total number of coins or tokens that will ever be created for a specific crypto.

What is Max Supply in Cryptocurrency?

The maximum supply of a coin or token refers to the total number of coins that can ever be minted or mined, including burned or unmined coins.

What is Total Supply in Cryptocurrency?

Total supply encompasses all tokens or coins that have been created for a crypto, including those in circulation and those not.

What is Circulating Supply in Crypto?

Circulating supply refers to the number of coins or tokens that are currently available and in circulation in the crypto market.

Total Supply vs. Max Supply

Max supply is the total number of tokens that will ever be created, while total supply excludes burned tokens.

Circulating Supply vs. Token Supply

Total supply represents the maximum number of coins or tokens that will ever exist, while circulating supply refers to the coins that are actively in circulation.

Significance of Cryptocurrency Supply

These metrics play a crucial role in determining a cryptocurrency's scarcity, inflation rate, and value.

Max Supply and Scarcity

A fixed max supply contributes to the perceived scarcity and value of a cryptocurrency, similar to precious metals like gold.

Total Supply and Inflation

Total supply, including burned tokens, influences the inflation rate of a cryptocurrency.

Circulating Supply and Market Cap

Circulating supply is used to calculate market capitalization, which reflects the current market conditions and liquidity of a cryptocurrency.

Examples

• Bitcoin (BTC): Max supply of 21 million coins
• Dogecoin (DOGE): No max supply cap, inflationary with a continuously increasing supply
• Ethereum (ETH): No capped max supply, new tokens can be created indefinitely

Conclusion

Understanding cryptocurrency supply is essential for assessing the value and scarcity of digital assets. Total supply, max supply, and circulating supply provide insights into the dynamics of a cryptocurrency and its potential impact on the market.