There is a set number of coins that will ever be in circulation for some cryptocurrencies such as Bitcoin and thus the supply is regarded as finite.
Other currencies have no maximum restriction but do restrict the number of new coins that can be created annually. The entire number of tokens that will ever be mined is known as the cryptocurrency’s maximum supply, and this maximum supply typically gets established when the Genesis block is produced.
Although not entirely rigid, Bitcoin’s tight protocol and code are designed to ensure that there will never be any more BTC mined, as its maximum supply is capped at 21 million. In contrast, stablecoins typically maintain a consistent maximum supply at all times to prevent a supply shock that can impact and cause price fluctuations.
There are two reasons why a currency would have a limited supply. The first is because of a fixed market cap. Market capitalization refers to the total value of all a company’s shares of stock and is calculated by multiplying the price of a stock by its total number of outstanding shares or a currency being within its early stages of development yet also presenting high growth opportunities.
The Value of Finite Supplied Cryptocurrencies
In the crypto-verse, the rarer a currency or token is, the more valuable it becomes, even in price value. Finite-supplied cryptocurrencies are precious as their scarcity or rarity makes them more difficult to acquire, resulting in higher profitability once acquired.
Many cryptocurrencies have an infinite supply of coins that can be in circulation and are thus uncapped in supply. Therefore, those with a finite and fixed supply set are considered rare, creating another level of value for the coins outside of their functionality, and urging investors to buy them. In essence, the rarer the coin, the steeper the increase in demand, which subsequently leads to an increase in the value.
Purchasing a cryptocurrency with a fixed/limited supply is an effective way to profit from its future value. The most crucial factor that one needs to consider is whether the currency has a rising demand at the time of the halving cycle.
For instance, it is anticipated that Bitcoin will continue to be halved until 2140. This means that until then, investors or miners will receive rewards or payouts for their work. The miners, who add new currencies as block rewards, will control the price until that time. Due to this reasoning, Bitcoin’s value by the year 2140 could potentially be quite high.
Crypto experts at Bitai Method Official – a popular trading platform and bot, have detailed a comprehensive guide to the top finite supplied currencies in 2023.
Top Limited Supply Cryptocurrencies to Invest in
Bitcoin was the first ever cryptocurrency to be launched, making it the father of all cryptocurrencies that set the blueprint for all existing and upcoming cryptocurrencies. Bitcoin tokens are limited to a supply of 21 million, meaning no tokens above this number can ever be created or circulated. As the leading currency, Bitcoin has been viable and relatively stable for years, though it has seasons where it massively increases in demand and then declines in demand. Of all currencies, Bitcoin is the most secure coin to invest in, with assured returns in value.
Litecoin, a currency that functions as a run-off of Bitcoin, has the same principle functions as Bitcoin but was designed to be used for cheaper transactions and to be more efficient for daily use. The currency has a market cap of 84 million tokens, with over 75% currently in circulation. This fixed supply means mining block rewards will be smaller in the long run.
Cardano is an ecosystem that allows other developers to create tokens, decentralized applications, or other use cases for scalable blockchain networks. Cardano can process more than 250 transactions per second (TPS), and this number is expected to go up as they develop further and upgrade the chain to scale better, making it better and more efficient than Bitcoin and Ethereum, which are currently dominating the crypto markets as it is much faster when coming to processing transactions. Cardano has one of the highest maximum supply rates, which is set at 45 billion. Due to its fast processing function and ongoing developments, the currency is expected to increase in value.
Chainlink, an Ethereum-based token, also functions as a decentralized network that facilitates secure communications between Ethereum projects and various off-chain data. The token has a maximum supply limit of 1 billion and a value of $30 per unit, which can be used to create and run smart contracts.
5. Stellar (XLM)
Stellar is a token and a decentralized protocol on open-source code to transfer digital currency to fiat money domestically and across borders. The token has a maximum supply limit of 50 billion and is valued at around $.40 per unit. Most importantly, the token can be used for payment settlement across borders and for personal transactions.
6. Avalanche (AVAX)
Avalanche (AVAX) is a cryptocurrency and blockchain platform that rivals Ethereum. AVAX is the native token of the Avalanche blockchain, and it uses smart contracts to support various blockchain projects; furthermore, transactions are processed near-instantly on the platform. The maximum number of AVAX coins that can be supplied to the market stands around 720 million, and 391 million were found to be in supply in October 2021. The total market cap of AVAX is approximately USD 14.3 billion.
7. Ripple (XRP)
Ripple is a blockchain-based digital payment network with a native coin, XRP. The core function of this token is to facilitate faster and cheaper financial transfers across the globe. The coin market cap is standing at $48 billion with a maximum supply of 100 million coins.
Will Cryptocurrencies Still be Profitable in the Future?
Cryptocurrencies have gained tremendous popularity over the past ten years, and as a result, the way we view the financial sector has undergone a radical change. Digital currencies also offer a variety of advantages and applications, such as increased security, instantaneous transactions, and low to no transaction costs. They are considered more efficient and effective because of their decentralization and independence from centralized agencies.
In addition to the above, it is important to note that digital tokens are highly valuable. This is because they fulfill the characteristics of money: durability, portability, divisibility, fungibility, scarcity, and acceptability.
Although limited-supply cryptocurrencies are profitable, it does not mean infinite-supply tokens are not valuable or profitable. For instance, Ethereum has an endless supply of tokens yet it is the second-largest cryptocurrency dominating the crypto markets with excellent chances of superseding the leading cryptocurrency over the years due to its increase in popularity and demand.
Moreover, the rarity of a cryptocurrency does not make it more valuable. The core functions it serves and its efficiency, including how the technology can better benefit users or investors, are the most important reasons to look out for it. This includes if there is scalability and sustainability over the years, which would make the currency and the technology that supports it more sustainable and, consequently, more in demand. Thus, it is vital to do your research and make wise decisions regarding investing.
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