Nowadays, cryptocurrency has become a hot topic for almost all investors but sometimes cryptocurrencies could be challenging for investors due to the less and poor understanding of the crypto terms. One of the critical aspects of cryptocurrency is its supply because it is the factor that affects the price like it could dip or rise. It dips when the demand is low and the supply is high, on the other hand, it would be high when the demand is high but the supply is low. Well, today in this article we will explore the difference between Maximum, Circulating, and Total Supply, by the end of this article you will be able to distinguish between these terms so let's get started!
What Is Maximum Supply?
Maximum supply is the maximum amount of cryptocurrency, on the other hand, we can say that maximum supply is the total number of coins that can ever be minted and after reaching the maximum supply no new coin is ever released. Each cryptocurrency has a specific maximum supply that can never be exceeded. For instance, if I talk about Bitcoin (BTC) so its maximum supply is 21 million coins, after reaching the maximum supply no new (BTC) would be launched ever. Another example is Ethereum (ETH), its maximum supply is infinite.
What Is Circulating Supply?
The term "circulating supply" describes the total quantity of coins that are presently in use and accessible for trading by the general public. These coins are held by various investors, exchanges, and other stakeholders. The circulating supply can be changed over time in case coins are minted or burned and the current circulating supply of Bitcoin (BTC) is 19 million and Ethereum is 119 million (as of march 2023).
What Is Total Supply?
Total supply is the total amount of cryptocurrency that currently exists in the marketplace. It includes coins that are not in circulation, coins that have been burned or lost as well as represents the sum of the circulating supply and the coins that have not yet been generated.
In conclusion, understanding of maximum, circulating, and total supply is essential for each investor. Maximum supply is the maximum amount of any cryptocurrency after reaching it no new coin would be created, circulation supply means the total number of coins that are publicly available to the public for trading and the total supply is the sum of circulating coins and the coins that are not in circulation. These supply concepts can overall affect the price of any cryptocurrency, before investing in any crypto you must have a better understanding of these terms to make informed investment decisions.