Max Supply Key Points
- Max Supply refers to the total number of coins or tokens that will ever exist for a specific cryptocurrency.
- It is a defining characteristic of many cryptocurrencies, establishing scarcity and influencing price.
- The max supply is pre-determined in the code of the cryptocurrency at the time of its creation and cannot be changed.
- Bitcoin, for example, has a max supply of 21 million coins.
- Not all cryptocurrencies have a max supply. Some, like Ethereum, have an unlimited supply.
Max Supply Definition
Max Supply is the total number of coins or tokens that will ever be created for a particular cryptocurrency. It is a critical factor in the design of many cryptocurrencies as it establishes a limit on the number of coins or tokens that can exist, creating scarcity and potentially influencing the value of the cryptocurrency.
What is Max Supply?
Max Supply is a term used in the world of cryptocurrencies to denote the total number of coins or tokens that can ever be minted or created for a particular cryptocurrency.
In the codebase of the cryptocurrency, a maximum limit is set which cannot be exceeded. This limit is known as the Max Supply.
Who Determines the Max Supply?
The max supply of a cryptocurrency is usually determined by its developers at the time of the cryptocurrency’s creation.
The chosen max supply is then hard-coded into the blockchain’s protocol and cannot be changed after the cryptocurrency is launched.
When is the Max Supply Reached?
The point at which the max supply of a cryptocurrency is reached depends on the mining or minting schedule set by the cryptocurrency’s protocol.
For example, Bitcoin’s max supply of 21 million coins is expected to be reached around the year 2140.
Where is the Max Supply Stored?
The max supply is stored in the code of the blockchain on which the cryptocurrency operates.
This information is publicly available and can typically be found on cryptocurrency information websites and within the cryptocurrency’s whitepaper.
Why Does Max Supply Matter?
The max supply of a cryptocurrency is important because it creates scarcity, which can influence the price of the cryptocurrency.
A lower max supply can create more scarcity, potentially leading to a higher price per coin if the demand is high.
How is Max Supply Different from Circulating Supply?
While max supply refers to the total number of coins or tokens that can ever exist for a cryptocurrency, circulating supply refers to the number of coins or tokens currently in circulation and available for buying and selling.
In many cases, the circulating supply is lower than the max supply because not all coins have been mined or minted yet.
