Circulating Supply
The term "Circulating Supply" in the context of cryptocurrency is similar to the idea of shares in the stock market that are available to the public. It refers to the number of coins or tokens that are currently available and circulating in the market, accessible to the public to buy, sell, or trade. The main difference between the total supply and the circulating supply relates to the accessibility and availability of the coins or tokens.
Understanding Circulating Supply
Cryptocurrencies are built on blockchain technology, which usually sets a maximum limit of tokens that can ever be created, or "minted". But not all of those tokens may currently be available for trading. The Circulating Supply is the number of tokens which have been minted, and are not locked or reserved in any form. They are in the hands of the general public, businesses, or are available on cryptocurrency exchanges.
How Circulating Supply Affects Value
Just as with supply and demand in other forms of financial markets, the circulating supply plays a large role in determining the value of a particular cryptocurrency. If the circulating supply is low and demand is high, this can increase the cost of each individual unit. On the other hand, a high circulating supply with low demand can decrease the price.
Determining Circulating Supply
The actual circulating supply of a cryptocurrency can be hard to determine with absolute precision. Cryptocurrency creators or related foundations often hold a significant portion of the total supply which is not included in the circulating supply. But once it's sold or distributed in some other way, it is then added to the circulating supply. Loss, burning, or locking away of tokens can also reduce the amount of circulating supply.
Notable Aspects of Circulating Supply :
- The circulating supply does not always equal to total supply of a cryptocurrency. The total supply includes all coins or tokens that have been created, even if they are not currently available for trading.
- The circulating supply can change over time as more coins or tokens are created, or existing ones are destroyed or become inaccessible.
- Different sources sometimes report different numbers for a cryptocurrency's circulating supply, due to different methods of calculation or availability of data.