Total Supply is a term used in cryptocurrency to refer to the total number of coins or tokens that will ever exist. This number is usually predetermined at the time of creation and can range from millions, such as Bitcoin’s 21 million, to billions. It is important for investors and traders alike to understand the supply of any given crypto asset before investing, as it can affect price volatility and appreciation potential over time.
In many cases, coins are created with a finite amount in circulation (or “inflation”) which limits how much new currency can be produced every year or so. This type of inflation encourages demand by creating scarcity; when fewer coins are available on the market they become increasingly valuable. Coins like Bitcoin use this system while others like Ethereum have an infinite amount of tokens set aside but only issue them gradually through mining rewards or other methods over a period of years.
The Total Supply figure may also include pre-mined coins that were released into circulation prior to launch—for example, Ripple had 100 billion XRP created all at once when it was first issued—but these are typically not counted towards circulating supply figures since those tokens were already generated when they hit exchanges rather than being mined later on. Additionally, some cryptocurrencies may hard fork their blockchain resulting in two different versions both having separate supplies – something investors should be aware of if they wish to hold both types after such an event takes place! Lastly, it’s important for users who buy digital assets via decentralized exchanges (DEXs) or peer-to-peer platforms like Uniswap that there could potentially be more liquidity than what shows up on CoinMarketCap due these protocols allowing anyone trade without reporting trades publicly.
In conclusion understanding total supply is essential for informed investment decisions within cryptocurrency markets and should always take priority ahead making any trading decisions based solely off speculation!