Title: Dark Horse Crypto Currency: Understanding the difference between total supply and circulating supply
Introduction
The Crypto Currency World has been rapidly developing since its inception in 2009, and many new players enter the market every year. However, among these newcomers, one concept stands out as a key aspect of understanding the dynamics of the crypto currency — the difference between
total supply and
circulating supply . In this article, we will enter the key differences between these two important metrics, providing insights to help in moving in the complex world of the crypto currency.
What are the total supply and circulating supply?
In order to understand the difference between the total supply and the circulating supply, we first define every term:
* Total supply (t) : This refers to the total amount of cryptocurrency supply, which represents all the coins or tokens that are created or will be created. It includes not only newly minted coins, but also all existing coins that are still in circulation.
* Circulating supply (CS) : This is part of the total supply that has already been distributed among users, owners and exchanges. Represents the number of coins that individuals or institutions are actively using.
Key differences
Now that we have defined both terms, we explore key differences between the total supply and the circulating supply:
- Time box : Time frames differ significantly between these two metrics. Circulating supply is the current amount of coins that exist in the system, while the total supply refers to all existing coins.
- Volatility : Circulating supply can quickly vary due to different market factors, such as changes in user’s demand or prices. This makes it a volatile indicator, while the total supply remains constant, which reflects the actual number of coins available.
- Inflation
: Circulating supply can lead to inflation, where existing coin supply increases, causing their value to increase over time. However, this is not always the case in the cryptocurrency markets, which are known for high prices instability.
- predictability : The total supply is generally more predictable than the circulating supply, as it reflects the exact reflection of all available coins. The circulating supply can be very unpredictable, making it a challenging metric for forecast.
Examples in the real world
Let us examine two examples that show the difference between the total supply and the circulating supply:
* Bitcoin (BTC)
: The total supply of bitcoin is 21 million, which reflects the initial edition of coins in 2009. Currently, there are over 18 million bitcoins in circulation, with the remaining coins mining or switching from the system.
* Ethereum (ETH) : Although the total supply of Ethereum remains constant at about 118 billion, the circulating supply has varied significantly due to changes in the demand of users and market conditions.
Conclusion
Understanding the difference between the total supply and the circulating supply is crucial for anyone interested in the CRIPTO currency markets. Recognizing these key differences, you will be better equipped to move into the complex world of the crypto currency, adopting informed investments and avoid potential traps. Keep in mind that the total supply remains a reliable indicator of the actual number of coins available, while the circulating supply may show vapalic behavior.
Tips for Investors in the Crypto Currency
To maximize your return on the cryptocurrency markets, consider the following:
* Keep existing coins : investing in established crypto currencies such as Bitcoin or Ethereum often brings lower volatility and greater stability compared to newer coins with uncertain market prospects.