What is the difference between circulating supply, total supply and max supply?
Users who are new to Cryptocurrency will find it difficult to understand the coin market capitalization. For better understanding we’ve already made a post explaining Cryptocurrency market capitalization, supply and volume. If you are new then we suggest you to go through that article. Market demand and supply is the main factor that determines a coin’s value. Less the supply, more the demand and so more the coin’s value will be. Hence it is very important that you analyze the coin supply before investing or start mining it.
All most all crypto currencies are capped to certain numbers. There are few crypto’s which are not hard capped and have infinite supply. On the other hand there are also coins (ICO) that are locked by a individual or a company which then be released onto the market (eg: Ripple XRP). A coins supply is one of the most important factor that affects the market cap and it is the most misunderstood metric by many newbie’s.
For example Litecoin’s (LTC) current market cap is $11,619,268,134 with a circulating supply of 55,488,387 LTC. Whereas the market cap of Bitcoin (BTC) is $194,997,116,051 and its circulating supply is just 16,901,012 BTC. The supply of Bitcoin will never ever even be close to what LTC supply currently is because Bitcoin’s maximum supply is capped to 21,000,000 BTC. 21 Million BTC is the maximum number that will ever exist.
Here we’ll explain what circulating supply, total supply and max supply in a Cryptocurrency is.
Where to find supply information of a cryptocurrency?
Before explaining about crypto currency supply system we’ll first see where to get the supply information of a particular crypto currency. There are three sources where you can usually find the supply information of a coin.
- coinmarketcap.com – On coinmarketcap website for each and every Cryptocurrencies you can find its supply information. You can find the current supply, total supply and its max supply.
- Bitcoin Forum Announcement board – Each and every new Altcoins will be announced first on Bitcoin forum. On the announcement page if you look in to coin’s specifications you can get the coin’s supply detail that is the Maximum coin supply that will ever exist.
- Coin’s official website – A coin; when it is launched it will definitely have a website consisting whitepaper, resources and other information where you can find its supply information as well.
Circulating Supply Vs Total Supply Vs Max Supply Vs Infinite Supply
Circulating supply is the amount of coins or tokens that’s been mined or generated. It’s the approximate number that’s currently in public hands and circulating in the market.
The amount of coins that is already in circulation + new mined coins which are not in the market is the Total supply. Total supply is the total number of coins that is currently in existence however not all are circulating. For several reasons there are coins that are reserved or locked and are not sold for public market which doesn’t affect the coin price. Total supply is normally equal or greater than the circulating supply.
It is the maximum number of coins that will ever exist for a crypto currency. There won’t be any more supply once a coin reaches its max supply cap as it is the maximum amount that can ever be mined or produced.
Yes, you heard it right! There are coins with infinite supply (eg: Ethereum). Ethereum current circulating supply is 97,993,104 ETH, however it has no hard cap and its max supply is Infinite. So you might ask; if Ethereum is infinite then doesn’t that limit its value.
Value of a coin is based on its scarcity however there is another term in economics known as Time preference. Ethereum value may decrease in future who knows; however in our time period the amount of ETH that will exist will be small. Moreover the rate of release of coin will diminish over time thus adding value to it.
Will a coin reach its max supply?
A coin is designed in such a way that it should never exceed its max supply. However the question is will a coin reach its max supply and when? Let’s take Bitcoin as a example. It is estimated that around year 2140 BTC will reach its maximum supply. Bitcoin has controlled supply and its block reward decreases every 4 years. Its expected by the year 2032 99% of the Bitcoins will be mined. To mine just that last 1% it takes 100 years.
Practically we don’t think Bitcoin will reach its maximum supply which is 21 million. One reason is there are so many Bitcoins that are lost which are of no use. Also the miners won’t continue mining if the rewards are too less.
So what happens once Bitcoin reaches its maximum supply? The answer is simple. There would be no more inflation. If the demand of the coin keep raising then its value will raise substantially. But will the demand for Bitcoin raise in future, who knows?
We hope you find this information helpful if so then please do share it. If you have any thoughts on cryptocurrency coin supply that you’d like to add then please comment.
Thank you for this information. By the way what is the difference between total and max supply?
It seems the max supply used for inflation whenever developer or founder need’em. Maybe I’m wrong. But can’t imagine such seperation except in the term of fraud.