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Glossary

Circulating Supply

November 21, 2023 - Around 2 mins mins to read

Understanding Circulating Supply

Circulating Supply refers to the changing amount of cryptocurrency coins or tokens that are currently in circulation. This value can vary over time, as it can both increase and decrease.

If a cryptocurrency is mineable, new coins can be gradually created through the process of mining. On the other hand, in the case of a centralized token, the supply can be increased at the discretion of the developers through instantaneous minting.

However, it is important to note that the supply can also decrease. This can occur intentionally through burning, or unintentionally due to accidents such as sending coins to an irrecoverable address or losing access to a wallet where funds are stored.

It is worth mentioning that the network as a whole does not have accurate information regarding the exact amount of the total supply that is actively circulating. Therefore, the metric of circulating supply serves as an imperfect approximation.

For instance, let’s consider Bitcoin (BTC). While the nominal circulating supply of Bitcoin should be over 18 million coins, which is the number of Bitcoin mined since the network’s inception, it is estimated that approximately 4 million BTC have been permanently lost. This brings the true circulating supply closer to 14 million.

It is crucial to differentiate circulating supply from total supply, which represents the number of coins that have been mined thus far, minus the coins that have been intentionally burned. Additionally, there is the concept of maximum supply, which is a hard-coded limit that neither the total supply nor the circulating supply can surpass.

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Coincu

Glossary

Circulating Supply

Understanding Circulating Supply

Circulating Supply refers to the changing amount of cryptocurrency coins or tokens that are currently in circulation. This value can vary over time, as it can both increase and decrease.

If a cryptocurrency is mineable, new coins can be gradually created through the process of mining. On the other hand, in the case of a centralized token, the supply can be increased at the discretion of the developers through instantaneous minting.

However, it is important to note that the supply can also decrease. This can occur intentionally through burning, or unintentionally due to accidents such as sending coins to an irrecoverable address or losing access to a wallet where funds are stored.

It is worth mentioning that the network as a whole does not have accurate information regarding the exact amount of the total supply that is actively circulating. Therefore, the metric of circulating supply serves as an imperfect approximation.

For instance, let’s consider Bitcoin (BTC). While the nominal circulating supply of Bitcoin should be over 18 million coins, which is the number of Bitcoin mined since the network’s inception, it is estimated that approximately 4 million BTC have been permanently lost. This brings the true circulating supply closer to 14 million.

It is crucial to differentiate circulating supply from total supply, which represents the number of coins that have been mined thus far, minus the coins that have been intentionally burned. Additionally, there is the concept of maximum supply, which is a hard-coded limit that neither the total supply nor the circulating supply can surpass.

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