Max Supply

What is max supply?

Cryptocurrencies have a maximum supply that is set at the time of creation. This is the maximum amount of coins that will ever exist in the lifetime of the cryptocurrency. Once this limit is reached, no more coins will be produced.

The maximum supply of digital assets is usually determined by the underlying protocols of those assets. For Bitcoin, the maximum supply is fixed at 21 million. Not all cryptocurrencies have a predetermined fixed supply, Ethereum being one of them. The maximum supply for Ethereum is not fixed, and can be changed based on how the protocol is programmed.

The maximum supply of a cryptocurrency is different from the total supply. The maximum supply is the total number of coins that can be mined, while the total supply is the amount of coins that have been mined minus the number of coins that have been lost.

Types of Maximum Supply in Crypto

There are different types of maximum supply:

1. Cryptocurrencies can have different maximum supplies. The most common type is a fixed max supply, which is implemented in most cryptocurrencies. This means that there is a predetermined number of coins that will ever be in circulation, regardless of demand. Bitcoin is an example of this type of max supply.
2. A deflationary maximum supply is a type of supply that decreases over time. This type of supply is usually found in cryptocurrencies to reduce the inflation rate and create more scarcity. Ethereum plans to become a deflationary max supply coin.
3. A dynamic max supply is one that changes according to predetermined parameters, like the amount of coins in circulation and how fast the currency is being used. This type of supply is designed to be more flexible and adaptive to market conditions.

Cryptocurrencies that have no maximum supply can have an indefinite number of coins. This is often seen in utility tokens, where the number of coins is not limited by the number of coins but by the number of users.