What is Total Supply?

The total supply of a cryptocurrency refers to the overall number of coins or tokens that currently exist for that particular digital currency. It encompasses the total quantity available, including coins or tokens in circulation as well as those allocated for future use or held by the cryptocurrency's creators and team members.

The determination and specification of the total supply are usually established during the creation of a cryptocurrency through its underlying protocol or smart contract. This predefined limit sets an upper bound on the maximum number of coins or tokens that can ever be generated or made available. This finite supply helps to maintain confidence in the cryptocurrency's value by preventing unlimited inflation or dilution.

Total Supply vs. Max Supply

The total supply refers to the current max supply may be the same, indicating that all 21 million coins, and Litecoin, with a max supply of 84 million coins.

On the other hand, the total supply may be lower than the max supply, indicating that not all coins or tokens have been issued or are currently in circulation. This discrepancy can result from factors such as scheduled mining or distribution, reserved allocations, or tokens held by the cryptocurrency's team. Over time, the total supply may gradually increase until it reaches the max supply.

Total Supply vs. Circulating Supply

Circulating supply refers to the number of coins or tokens that are currently available and actively circulating in the market. It excludes coins or tokens owned by the cryptocurrency's creators, team, or reserved for future allocation. The circulating supply is a key metric for evaluating a cryptocurrency's market value, market capitalization, and liquidity. It represents the portion of the total supply that is accessible to the public and actively traded.

The distinction between total supply and circulating supply lies in the inclusion or exclusion of certain coins or tokens. While the total supply accounts for the entire quantity, including locked, reserved, or unreleased coins or tokens, the circulating supply focuses solely on the coins or tokens available for immediate use and trading in the market. Understanding these differences provides valuable insights into a cryptocurrency's scarcity, market dynamics, price discovery, and overall value proposition.