Total Supply

The Significance of Total Supply in Cryptocurrencies

Total supply represents the aggregate number of coins or tokens that currently exist within a cryptocurrency ecosystem, encompassing those in circulation as well as those that are locked in some form. It is calculated by subtracting the total coins that have been burned or destroyed from the overall coins that have been mined or issued.

Consequently, the total supply accounts for both the circulating supply and the coins that are yet to be introduced to the open market. This includes coins held under lockup or vesting periods, often following private sales or Initial Coin Offering (ICO) events. However, coins or tokens that are subsequently burned are excluded from the total supply.

Comparison with Circulating Supply

In contrast to the total supply, circulating supply refers to the coins already in circulation and available for trading in various cryptocurrency markets. It includes coins accessible to the public, excluding those that are locked or being held in reserve. Market capitalization calculations typically consider only the circulating supply, as the portion of the supply that is locked or reserved does not directly impact the market prices of a cryptocurrency coin.

Differentiating Total Supply from Max Supply

Total supply aggregates all coins that have been mined or issued, deducting the ones that have been burned, whereas max supply encompasses all coins that will ever exist. Max supply incorporates coins yet to be mined in the future, existing coins included in the total supply, and coins that have been burned. From a cryptoeconomics standpoint, the value of many coins is derived from their inherent scarcity. For instance, Bitcoin and other mineable coins are generated with each validated block, but this process is not infinite, as most mineable cryptocurrencies have a capped max supply defined at the creation of the genesis block.