Hidden Cap is a term used to describe a cryptocurrency asset with an unknown or unannounced maximum supply limit. In other words, it is an asset that has no upper bounds on the number of tokens available for circulation. This type of cryptocurrency can be beneficial because it allows holders to receive higher returns by investing in coins that have limited availability and thus offer greater scarcity value. However, there are some risks associated with hidden cap assets as they may not have sufficient liquidity, making them more difficult to buy and sell. Additionally, without knowing the total supply of tokens, investors cannot accurately gauge their potential return on investment (ROI).
In terms of how these types of cryptocurrencies work, most hidden cap assets are created through “pre-mining”—a process whereby developers create a certain amount of units before releasing the asset into circulation. The pre-mined coins are then distributed among early adopters and users who will help spread awareness about the project via promotions and marketing activities. Pre-mining also enables developers to raise funds quickly without having to rely on venture capital or traditional methods such as initial public offerings (IPOs).
While pre-mining is one way in which hidden cap assets come into existence, there are instances where new tokens can be generated through mining once an asset has been released onto exchanges or made accessible for trading purposes. In this case, miners use specialized hardware to solve complex mathematical problems in order to generate new blocks containing additional coins/tokens which get added onto existing circulating supplies over time (this process is called ‘block reward’). Once all existing tokens have been mined out from block rewards within a specific timeframe set by developers beforehand—the maximum supply limit will effectively become known since no further units will ever enter circulation again thereafter.
Overall, investing in any type of cryptocurrency always carries risk regardless if it’s listed publicly or not; however understanding what kind you’re getting involved with beforehand can help buyers better manage their expectations when deciding whether or not they should invest their money into something like a hidden cap cryptoasset.
