Supply

Supply, in the context of cryptocurrencies, refers to the number of tokens or coins that are currently available and in circulation. This supply is determined by the rules set in the blockchain protocol of each cryptocurrency.

Here are a few important concepts related to supply in cryptocurrency:

1. Total Supply: This is the total amount of coins in existence right now (minus any coins that have been verifiably burned).
2. Max Supply: The maximum amount of coins that will ever exist in the lifetime of the cryptocurrency. Not all cryptocurrencies have a max supply. For instance, Bitcoin has a max supply of 21 million coins, whereas Ethereum does not have a max supply limit.
3. Circulating Supply: The number of coins that are circulating in the market and are in public hands. It is analogous to the idea of shares outstanding in the stock market.
4. Inflation Rate: This refers to how much the supply of a cryptocurrency increases each year. For example, Bitcoin’s inflation rate reduces approximately every four years in an event known as a “halving.”

It’s also important to note that the supply characteristics can greatly affect the price and market capitalization of a cryptocurrency. For example, coins with a limited max supply may see their value increase due to scarcity, assuming demand remains strong.