The Impact of Limited Supply on Cryptocurrencies

Whenever it comes to cryptocurrencies, there are different terms that we get to hear about. Among them, one such term is the limited supply?

So the question is, what does limited supply mean in cryptocurrency? Well, this is what I am going to talk about in this article.

Also, limited supply is not the only supply term that exists in the world of cryptocurrency. But there are a few other types of supplies that also exist. And about all of these, I will explain briefly below.

So here we go:

The Impact of Limited Supply on Cryptocurrencies

Different “Supply” Terms in Cryptocurrency

The supply term represents the total number of coins in circulation in cryptocurrency. Also, under the supply term, there are many other terms that exist.

For instance:

  • Fixed Supply: Fixed or maximum supply represents the total number of coins that will be in circulation. For instance, Bitcoin has a certain number of coins that can be mined. So there is a fixed number of Bitcoins that can be in circulation.
  • Total Supply: Total supply represents the number of coins mined so far. Also, it includes the missing coins and the coins which are no longer in circulation or lost.
  • Circulating supply: Circulation supply represents the number of coins in circulation.

What Does Limited Supply Mean in Cryptocurrency?

Limited supply represents the market cap on the maximum number of coins issued in the market.

As The Money Mongers reported; “Bitcoin supply is limited to 21 million only. So once all the Bitcoins are mined, no more Bitcoins can be mined further or be in circulation”

Apart from Bitcoin, there are many other crypto coins that have already reached their maximum supply limit.

What happens when all the Bitcoins are mined?

As mentioned, there will only be 21 million Bitcoins in circulation and not more than that. According to experts, all Bitcoins will be mined by 21 40.

Bitcoin Blockchain was designed on the basis of controlled supply. As a result, there can only be a fixed number of coins that can be in circulation. Limited supply is one of the reasons why a Bitcoin is valuable. A finite amount of coins will be created and yet the possible value of fiat money chasing that stack could increase over time, resulting in an increasing value per coin, Bitcoin speculators hope. The best cryptocurrency books point to the limited supply of Bitcoin as being one of its distinguishing features over fiat currency, which can continue to be minted indefinitely by central banks.

Once all the 21 million Bitcoins are mined, the Bitcoin network will largely operate the same way as it is doing now.

However, no new coins will be issued, but the transaction blocks will get confirmed. And for the Bitcoin network, the transaction fees will be the main source of revenue. Also, it is said that Bitcoin’s network will function as a closed economy.

However, what exactly will happen after all the Bitcoins are mined is still unknown. But different experts have different theories of what will happen. You’ll no longer be able to earn new Bitcoin by mining.

For instance, one theory suggests that Bitcoin platforms will only be used for large transactions. So the bitcoin stakeholders can generate sufficient revenue via transaction fees.

 Examples of cryptocurrencies with a fixed supply

1. Bitcoin (BTC)

Without any doubt, Bitcoin is the most popular yet the biggest cryptocurrency available out there. The currency is being slowly used for replacing fiat currencies.

Bitcoin can have a maximum supply of 21 Million coins. As of now, according to CoinMarketCap, the coin has a circulating supply of 18,894,562.00 BTC. The coin is soon to hit its total supply limit, which will happen around the year 2140. Is it the best cryptocurrency to invest in? You’ll need to decide.

Also, it is said that the last three per cent of Bitcoin will only be mined after the year 2100. However, over the period of time, the reward for every block will get reduced. As a result, Bitcoin mining will be a complex thing in the future.

2. Binance Coin (BNB)

Binance Coin is the native token of the popular crypto exchange Binance. The coin was launched back in 2017 as an Initial Coin Offering or ICO. It is also said that the coin will have a total supply of 200,000,000 BNB coins.

The coin aims to become the one-stop solution for all distributed ledger needs. Also, the network now has the Binance chain, which supports DApps or decentralized apps.

At the time of writing this article, BNB has a market cap of a total of $95,915,198,724, and it has a maximum supply of 166,801,148 BNB. Also, all of the coins are in circulation, so there won’t be any new coins.

3. Cardano (ADA)

In today’s time, Cardano is considered one of the best cryptocurrencies. The coin was launched back in 2017 as a blockchain platform. It is a native token that works on the proof-of-stake consensus.

Thanks to the recent Alonzo hard fork, Cardano’s blockchain now has support for smart contracts. The coin is said to have a total supply of 45 billion coins.

And according to CoinMarketCap, the total circulating volume is 33.37B ADA as of now.

4. XRP (XRP)

XRP runs on the RippleNetwork, which belongs to the blockchain digital payment network Ripple. It is a native currency of the XRP ledger.

The token’s main aim is to make international payments cheaper and quicker. The coin has a maximum supply of 100,000,000,000 tokens. And out of that, 47.25B XRP is in circulation, according to CoinMarketCap.

5. Avalanche (AVAX)

Lastly, there is the Avalanche. This cryptocurrency is designed to allow decentralized apps to be built on its blockchain platform.

Avalanche is said to have a great future. As some of the projects running on Ethereum’s blockchain have integrated with Avalanche’s platform. Also, it has three different distinct blockchains, which are the X-Chain, P-Chain, and C-Chain. All of these blockchains offer different features.

Also, it is said that AVAX has a maximum supply of 720 million coins. And according to CoinMarketCap, 242,782,169.79 AVAX is the circulating supply at the time of writing this article.

Closing Words:

So that was all about cryptocurrency supply, and an answer to your question of what limited supply means in cryptocurrency. I hope this has answered the query, and now you know what different types of supply in the world cryptocurrency are and what they mean.

In case if there is anything else you would like to ask, then do drop a comment below.