Maximum Supply

What Is The Maximum Supply?

The maximum supply in digital currency is defined as the optimum or total available number of digital coins or tokens that could be produced. When the total supply is attained, no new currencies would be mined or generated any longer. Only the existing tokens or currencies would be in circulation.

Deeper Definition

In the world of cryptocurrency, the maximum supply is fixed and usually predetermined. The limit of this is based on the protocol on which such tokens or currencies are built; for this, max supply with the issuance of the coin is often considered the genesis block, which is based on reference to the source code of the project. The source code or crypto, among other things, tells us about its features and functions.

The best thing a crypto developer does for the sake of maximum supply is to set a fixed issuance rate together with the predetermined maximum supply of the coin. This step will help to prevent the possibility of inflation affecting the digital asset. This would, in turn, potentially lead to an increase in the commodity’s price over time. Consequently, if the cost of the digital asset eventually reaches the maximum supply, automatically this would lead to the reduced number of coins in circulation, and ultimately, it would create scarcity with an inflation rate of about 0%; this describes the deflationary condition.

Nevertheless, there are some digital assets without a predetermined max supply. The means there is a possibility of continuous mining or minting.

A popular example of such a type of digital asset is Ethereum, the second-largest cryptocurrency in terms of market cap. Ethereum does not have a predetermined fixed supply, as at now, new blocks of ETH are consistently on the rise by the day. It does, however, have an annual maximum supply of 18 million.

Maximum Supply Example

Bitcoin has a max supply of 21 million.

When bitcoin mining reaches 21million coins, no new bitcoin will be mined; only the ones in circulation will remain.

The maximum supply of Binance Coin (BNB) is 166,801,148