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Glossary

Total Supply

November 21, 2023 - Around 3 mins mins to read

In the world of blockchain and cryptocurrencies, the concept of total supply refers to the quantity of coins or tokens that have already been generated or mined within a specific cryptocurrency network. Understanding total supply is essential for investors, traders, and enthusiasts who want to evaluate the potential profitability and value of a particular cryptocurrency.

It’s important to note that not all coins included in the total supply measurement are available for use. Any coins that have been burned, meaning intentionally destroyed, are not taken into consideration. This is because burned coins are removed from circulation permanently, reducing the overall supply available in the market.

In contrast to total supply, circulating supply represents the overall number of tokens or coins that have been mined and are accessible for use in the market. Circulating supply does not include coins that can be created but have not yet been generated. When determining the market capitalization of a cryptocurrency, circulating supply is typically used instead of total supply. This is because cryptocurrency prices are primarily influenced by coins and tokens that can be used, rather than those that are inaccessible or locked.

Some coins within the total supply may be locked or kept out of circulation intentionally. These coins are often referred to as pre-mined coins, which are usually reserved for the development team, founders, or specific purposes of the cryptocurrency project. Additionally, tokens can be locked in smart contracts until certain conditions or milestones are met. For example, during an initial coin offering (ICO), tokens may be locked until certain stages of the fundraising process are achieved.

Examining the total supply of a cryptocurrency can provide valuable insights for investors. It can be an indicator of a cryptocurrency’s profitability, as well as help determine whether or not to invest in a particular virtual currency. A significant gap between circulating supply and total supply can have implications for future profitability. If a large number of tokens are introduced into the market at once, it can exert downward pressure on cryptocurrency prices.

However, it’s important to note that the total supply does not necessarily determine the maximum number of tokens or coins that can ever be mined. Some cryptocurrencies have a maximum supply cap, which is the highest number of tokens that can ever be created. For example, Bitcoin (BTC) has a maximum supply cap of 21 million coins. However, it’s estimated that around four million BTC are missing or considered “lost” due to various factors such as lost private keys, inaccessible wallets, or accidental transfers to irretrievable addresses.

In conclusion, total supply is a crucial metric to consider when analyzing and evaluating cryptocurrencies. It provides insights into the availability and distribution of coins or tokens within a specific blockchain network. By understanding the total supply and its relationship to circulating supply, investors and enthusiasts can make more informed decisions about the potential profitability and value of a cryptocurrency.

Author

Coincu

Glossary

Total Supply

In the world of blockchain and cryptocurrencies, the concept of total supply refers to the quantity of coins or tokens that have already been generated or mined within a specific cryptocurrency network. Understanding total supply is essential for investors, traders, and enthusiasts who want to evaluate the potential profitability and value of a particular cryptocurrency.

It’s important to note that not all coins included in the total supply measurement are available for use. Any coins that have been burned, meaning intentionally destroyed, are not taken into consideration. This is because burned coins are removed from circulation permanently, reducing the overall supply available in the market.

In contrast to total supply, circulating supply represents the overall number of tokens or coins that have been mined and are accessible for use in the market. Circulating supply does not include coins that can be created but have not yet been generated. When determining the market capitalization of a cryptocurrency, circulating supply is typically used instead of total supply. This is because cryptocurrency prices are primarily influenced by coins and tokens that can be used, rather than those that are inaccessible or locked.

Some coins within the total supply may be locked or kept out of circulation intentionally. These coins are often referred to as pre-mined coins, which are usually reserved for the development team, founders, or specific purposes of the cryptocurrency project. Additionally, tokens can be locked in smart contracts until certain conditions or milestones are met. For example, during an initial coin offering (ICO), tokens may be locked until certain stages of the fundraising process are achieved.

Examining the total supply of a cryptocurrency can provide valuable insights for investors. It can be an indicator of a cryptocurrency’s profitability, as well as help determine whether or not to invest in a particular virtual currency. A significant gap between circulating supply and total supply can have implications for future profitability. If a large number of tokens are introduced into the market at once, it can exert downward pressure on cryptocurrency prices.

However, it’s important to note that the total supply does not necessarily determine the maximum number of tokens or coins that can ever be mined. Some cryptocurrencies have a maximum supply cap, which is the highest number of tokens that can ever be created. For example, Bitcoin (BTC) has a maximum supply cap of 21 million coins. However, it’s estimated that around four million BTC are missing or considered “lost” due to various factors such as lost private keys, inaccessible wallets, or accidental transfers to irretrievable addresses.

In conclusion, total supply is a crucial metric to consider when analyzing and evaluating cryptocurrencies. It provides insights into the availability and distribution of coins or tokens within a specific blockchain network. By understanding the total supply and its relationship to circulating supply, investors and enthusiasts can make more informed decisions about the potential profitability and value of a cryptocurrency.

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