Maximum Supply

The total amount of cryptocurrency that shall ever be in circulation is known as the Maximum Supply. The max supply of Bitcoin is programmed to be 21 million and its supply is hard capped at this number. While a few crypto assets have a predefined maximum supply, others do not. For example, Ethereum’s maximum supply shall be dependent on later decisions as there is no hard capping on the number of coins in circulation.

Maximum supply is of significance as it lets an investor calculate the total market capitalization of the crypto project and therefore evaluate his investment strategy for that particular asset. The market cap of a project is calculated by multiplying the maximum supply with the price of an individual token. A low maximum supply is believed to be better than a high max supply as in such cases, the supply is less than the demand, thus making the asset deflationary. The max supply of Bitcoin being 21 million implies that there shall never be more than 21 million bitcoins in circulation at any given point in time.