The term “circulating supply” pertains to the quantity of publicly available cryptocurrency coins or tokens that are actively circulating within the market.
Over time, the circulating supply of a cryptocurrency can fluctuate, either increasing or decreasing. Take Bitcoin, for instance, where the circulating supply gradually expands until the eventual cap of 21 million coins is attained. This incremental growth is tied to the mining process, generating new coins approximately every 10 minutes. Conversely, instances of coin burning, as demonstrated by platforms like Binance, lead to a reduction in the circulating supply by permanently removing coins from circulation.
It’s important to differentiate circulating supply from both total supply and max supply. The total supply represents the total quantity of coins in existence, encompassing issued coins minus the burned ones. In contrast, max supply indicates the utmost number of coins that will ever exist, encompassing mined and future coins.
Furthermore, the circulating supply plays a pivotal role in calculating a cryptocurrency’s market capitalization. This is achieved by multiplying the current market price with the circulating coin count. For instance, if a cryptocurrency boasts a circulating supply of 1,000,000 coins valued at $5.00 each, the resulting market capitalization would amount to $5,000,000.
In summary, circulating supply captures the publicly available cryptocurrency coins in circulation, which can either increase gradually through mining or decrease via coin burning. This metric stands as a crucial factor in evaluating a cryptocurrency’s market worth and understanding its dynamic presence within the larger economic landscape.
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