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USA Real Estate Blog

An Ever Decreasing Supply – Ben Jones – Medium

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Only 21 million Bitcoin will ever exist.

One of the most attractive attributes that many cryptocurrencies have is a fixed known total supply. This makes them highly unique compared to other mainstream assets that typically have increasing maximum supplies.

Fiat money is the worst of the lot by far; literally millions of that stuff is simply being printed or digitally created out of thin air every single day. However, to all intents and purposes, even gold has an increasing known total supply since not every single vein of that precious shiny metal in existence has been discovered yet.

So what does a fixed known total supply actually mean for a coin or token’s potentially usable total supply?

The potentially usable total supply is the maximum amount of a cryptocurrency that will ever be in circulation.

A fixed known total supply would logically mean that the potentially usable total supply of a cryptocurrency is constantly decreasing.

Let’s consider Bitcoin as an example.

There will only ever be 21 million original Bitcoin in existence. It is impossible to create more Bitcoin beyond the maximum supply.

Admittedly, it is also impossible to destroy them.

So why, then, is the potentially usable total supply of Bitcoin at this very moment far less than 21 million if Bitcoin cannot be destroyed? Why, then, will this amount always continue to decrease with the passage of time

Because Bitcoin can still be lost.

Bitcoin’s public ledger has been tested for over ten years now, so there is no doubt that the technology behind it is reliable. However, Bitcoin assets are still held and owned by human beings — and as we well know, we, as a race, are far from perfectly reliable.

Losing Access Permanently

If one were to lose a Bitcoin address’s private key and seed recovery phrase in an irretrievable way, for instance, by accidentally shredding the piece of paper that they were written on or by losing the computer that they were stored on, then their Bitcoin would effectively be removed from the potentially usable total circulation. This “lost” Bitcoin would still always exist on the public ledger, of course, but it would simply be irretrievable by anyone.

Stolen Bitcoin does not count as the thief would still have access to the Bitcoin.

Illness And Death

The creation of a new Bitcoin address usually comes with many warnings about keeping private keys and seed recovery phrases absolutely safe. This is all well and good until the owner of this address suddenly loses either their memory or the ability to communicate as a result of illness. In less favourable scenarios, they may even die.

Some may have had the foresight to leave behind the private key and seed recovery phrase for their loved ones well in advance should something tragic like that happen to them. In that case, the Bitcoin is not lost.

If, however, these Bitcoin owners suffered these ailments so suddenly that they didn’t have time to leave their keys behind for their loved ones — or if, indeed, they deliberately wanted to take their digital assets “to the grave” with them, then those Bitcoin are removed from the potentially usable total supply as well.

Accidental Transfer

This last example is much less likely and involves Bitcoin being sent to a wrong address by a sender. If that address doesn’t exist on the public ledger, then the transaction would simply fail — this being the best case scenario for all parties involved. If, however, the Bitcoin is sent to an unused address that doesn’t particularly belong to anyone, then those Bitcoin would again be irretrievable and therefore lost forever.

As with the two examples above, if the wrong address has been transferred Bitcoin but that address just so happens to be in active use by someone else, then those Bitcoin are not considered lost from the potentially usable total supply.

Other Permanent Losses

The examples given above are by no means the only ways in which Bitcoin can be permanently subtracted from the potentially usable total supply.

How many other ways can you think of?

Burning

Moving away from the example of Bitcoin, some other cryptocurrencies actually have their total supplies reduced deliberately by the organisations running them in a process typically known as a coin or token burn. Burns can be carried out in countless different ways.

Some cryptocurrencies have a small but constant burn incorporated into their systems such as having every transaction permanently remove an amount from the total supply, while others have planned substantial burns of bigger amounts at specific announced times. A handful even have a combination of both constant and discrete burns.

Why burn? To decrease the supply in relation to the demand, of course! While this, in theory, should increase the price of tokens or coins, it actually rarely does so in any sustained or substantial way in reality.

Cashaa

Cashaa is a next-generation banking platform that aims to provide both individuals and companies with a range of integral financial services through their hybrid bank accounts. Cashaa’s native tokens are Ethereum-based and the fixed known total supply is only one billion.

CAS tokens are currently required to open and maintain higher tier accounts. Since opening for registration last year, Cashaa has already had many clever businesses rushing to open accounts with them. So while there is no limit to the number of business that would want to open accounts with Cashaa in the future, there is and always will be an ever decreasing supply of CAS.

Final Thoughts

There are some cryptocurrencies that do not, in fact, have fixed known total supplies — the most famous of these being Ethereum. However, this does not necessarily mean that Ethereum is not worth investing in. There is, after all, a reason why it’s hovering quite high up in terms of market cap!

Also, do be wary of certain cryptocurrency organisations that could, in theory, increase their coin’s or token’s total supply in the future — especially if they haven’t promised that the current total supply is fixed. This could easily be done during a transition between distributed ledgers, for instance, or by simply creating a new token or coin on the same ledger with a larger supply and retiring the old one from active use. Thankfully, both Cashaa and Bitcoin have definite fixed known total supplies.

For Ethereum-based tokens, the total supply on the Ethereum blockchain is always clearly stated. You may use Etherscan to ascertain this by visiting the token’s page.

CoinMarketCap may also be used to find out the total and circulating supplies of a cryptocurrency. Unfortunately, these values aren’t updated in real time and therefore aren’t always accurate.

Summary

Many cryptocurrencies have ever decreasing supplies, and this undoubtedly has a greatly positive impact on their prices in the long term as demand soars in relation to supply.

Good luck, have fun, and grab your favourite limited edition tokens and coins today!

Only while stocks last at current prices!

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