Issuance

Community Submission - Author: Anonymous

The basic definition of issuance is to create something and make it available. But in the crypto space, issuance refers to the generation of new cryptocurrency tokens or coins and this process can occur in a variety of different ways, according to the parameters specified by the creators of the project.

In the case of Bitcoin, the issuance is done through a process called mining, where mining nodes invest a lot of resources to validate new blocks of transactions and then generate brand new Bitcoins as a reward for their work. While Bitcoin issuance is dependent on mining and on the Proof of Work consensus algorithm, there are some other cryptocurrencies that are not mineable and, therefore, have a different form of issuance (for example, a gradual issuance over time or a pre-mine generation of coins).

In some cases, the cryptocurrencies are offered to investors as tokens through Initial Coin Offering sales, right after being generated by a startup or company. The issuance of the tokens is defined by a smart contract that determines beforehand what will be the max supply and initial total supply of that particular token. Investors then may choose to participate or not in the sale based on the token economics presented by the project.