The concept of cryptocurrencies stemmed from the idea to replace the traditional fiat money.
The paper money that we use today is in abundance; fresh money is printed now and then when the economy falls short.
However, what people should bear in mind is that with every money that is getting printed, the existing value or the purchasing power of it falls, and over the years, we have seen it happen steeply.
And that is why money is inflationary in nature.
Cryptocurrencies That Have Strict Limited Supply
Whereas when you think of cryptocurrencies that are aimed towards being a medium of exchange, you will notice that some of them have strict supply. It is so to ensure that the cryptocurrencies’ individual value isn’t diluted because of excess supply.
The scarce or limited supply of a cryptocurrency is one of the significant factors that add value to it:
- When limited supply cryptocurrency becomes prominent, its price shoots up because of its high demand.
- Limited supply cryptocurrencies are deflationary as instead of losing value over time; they gain value because of halving
To give you a gist: Halving is a phenomenon that reduces the supply of new cryptocurrencies in circulation by 50%
Now that you what importance does limited or scarce supply play, let’s find out the cryptocurrencies that have strict supply:
Without a doubt, the first cryptocurrency on the list has to be Bitcoin.
It was launched to replace the traditional fiat, but knowing that we are far from that, it has settled to being the hottest cryptocurrency in town.
Bitcoin has a total supply of 21M, out of which around 18.5M coins are currently in circulation, and less than 3M Bitcoins are left to be mined. But worry not, the remaining coins will take over a century to be mined because of halving.
2. Bitcoin Cash
Bitcoin Cash came into existence back in 2017 as a hard fork on the Bitcoin network. As the Bitcoin network transactions increased, Bitcoin Cash proposed increasing the individual block sizes to ensure greater scalability.
However, because of differences of opinion, Bitcoin was forked, and Bitcoin Cash came into existence.
Although Bitcoin Cash is very similar to that of Bitcoin; both, Bitcoin and Bitcoin Cash have an equal supply of 21M coins, out of which around 18M are in circulation.
The only prominent difference between the two is that Bitcoin Cash is highly scalable because of its bigger blocks that enable faster transaction processing.
Built on the Bitcoin protocol, Litecoin aims to be an alternative for the first-ever cryptocurrency, Bitcoin.
Litecoin is aimed towards providing faster, cheaper, and secure p2p transactions.
However, the cryptocurrency differs from Bitcoin in terms of its hard cap, block transaction, etc. Litecoin has a limited supply of 84M coins, out of which more than 66M Litecoins are currently in circulation.
Having improved upon Bitcoin’s shortcomings, Litecoin also has some overlapping Bitcoin features like its p2p payment mechanism, similar price movements, etc.
DASH originates from the word ‘digital cash,’ this cryptocurrency came into existence in 2014 as a fork of Litecoin.
DASH again is a global payment network aimed towards facilitating faster, cheaper, and secure transactions. However, DASH’s focus is to bring a robust privacy solution to its network, unlike Litecoin.
In the case of Litecoin, the transactions on the network are completely transparent and can be viewed publicly. In comparison, DASH is a privacy coin whose transactions cannot be viewed publicly.
DASH has a total supply of 18M coins, out of which more than 9M DASH coins are in circulation.
Similar to DASH, Zcash is also an anonymity focused payment network.
Unlike other cryptocurrency transactions, where the transactions aren’t completely anonymous but are covered with respective public addresses that can be traced back to the users. Zcash is a privacy protocol that doesn’t reveal the user’s public addresses, making it nearly impossible to trace Zcash transactions.
However, individuals can choose to unhide their addresses if they wish to.
Zcash has a total supply of around 21M coins, out of which more than 10M cryptocurrencies are in circulation and almost half of Zcash cryptocurrency that is yet to be mined.
The Bottom Line
Scarcity does solve many key problems of traditional money. As we can see, there are plenty of cryptocurrencies that strive to be an alternative to the fiat that we use today.
But that doesn’t mean cryptocurrencies that have unlimited supply holds no value. E.g., Ethereum has no fixed supply, but it still has multiple use cases and is also the second-largest cryptocurrency by market cap.
The point here is to explain how hard-capped cryptocurrencies have a greater chance of preserving their value and the grand scheme of things eventually being used as money.
Simultaneously, I won’t deny that other factors like Demand- Supply, and Utility are also equally important to take into account.
[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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