One of the main metrics to consider when evaluating the potential of a cryptocurrency investment is its total supply. Read ahead to find out more about it!
What Is A Total Supply?
The total supply term refers to the number of tokens or coins that exist at a given moment, including those that are currently available for use and those that are locked or reserved.
This value is calculated by adding up all the units that have been issued and subtracting any that have been burned or destroyed. In essence, this means that the total supply represents the overall availability of a particular cryptocurrency in the market.
What You Need To Know About The Total Supply
The total supply definition is often confused with the max supply metric. However, these terms are completely different, as the latter refers to the maximum number of units of a specific cryptocurrency that can ever exist.
Unlike the total supply metric, the maximum supply is determined at the time of the creation of the cryptocurrency and is programmed into its blockchain network. It is one of the key factors responsible for a cryptocurrency’s scarcity, which is a characteristic that can significantly affect its desirability and value.
The total supply should also not be confused with the circulating supply, as the latter metric only accounts for the coins that are currently publicly available.
What’s more, due to the fact that the market price of a cryptocurrency cannot be directly influenced by coins that are locked, it is the circulation supply that is used in the calculation of market capitalization instead of the total supply.
However, the total supply of a cryptocurrency can play a crucial role in determining its potential profitability and helping users make informed investment decisions. For instance, a large gap between the circulating supply and the total supply often means that a cryptocurrency has great potential for future growth and profitability.
