Do All Cryptocurrencies Have a Finite Supply?
Do All Cryptocurrencies Have a Finite Supply?

Do All Cryptocurrencies Have a Finite Supply?

do all crypto currencies have a finite supply

Money comes in two varieties — precious metals like gold and fiat currencies that derive their value from being backed by governments. Cryptocurrencies represent a third form of money: digitally stored and transferrable without central authorities or bank middlemen – these characteristics make cryptocurrencies attractive to investors looking for mediums of exchange and stores of value, yet large price fluctuations have greatly diminished their purchasing power and rendered many unusable as payment tools.

Cryptocurrencies’ prices are determined by supply and demand; individuals buy and sell them as payment or asset trading instruments, but many remain confused about exactly how this affects price. There are two metrics used to measure available tokens: total supply and circulating supply.

A cryptocurrency’s total supply is the maximum number of coins ever to be mined; its circulating supply refers to those already mined but in circulation; for example, Bitcoin has an utmost 21-million supply and currently mines about 18 million; once reaching this maximum production in 2140 it will reduce by half every four years thereafter.

The circulating supply is also important as it indicates how much of a cryptocurrency’s total supply has been made available to the public. Investors use this metric to calculate market capitalization (or value).

As opposed to fiat currencies that are printed at will by central banks, most cryptocurrencies typically feature a fixed limit on their maximum supply programmed into their blockchain code. This ensures that a currency’s value does not depreciate over time – particularly important for assets like Bitcoin.

Investors typically look for cryptocurrencies with limited maximum supply, believing these will remain valuable over time due to mining being cut off once this cap has been reached and its price rises accordingly. But not all cryptocurrencies have this limitless supply; stablecoins such as USD Coin can have unlimited supply limits.