Community Submission - Author: Paolo Facchinetti
The term circulating supply refers to the number of cryptocurrency coins or tokens that are publicly available and circulating in the market.
The circulating supply of a cryptocurrency can increase or decrease over time. For example, the circulating supply of Bitcoin
will gradually increase until the max supply of 21 million coins is reached. Such a gradual increase is related to the process of mining
that generates new coins every 10 minutes, on average. Alternatively, coin burn
events like the ones performed by Binance
, cause a decrease in the circulating supply, permanently removing coins from the market.
The circulating supply refers to the coins that are accessible to the public and should not be confused with the total supply
or max supply
. The total supply is used to quantify the number of coins in existence, i.e., the number of coins that were already issued minus the coins that were burned. The total supply is basically the sum of the circulating supply and the coins that are locked up in escrow. On the other hand, the max supply quantifies the maximum amount of coins that will ever exist, including the coins that will be mined or made available in the future.
Moreover, the circulating supply of a cryptocurrency
can be used for calculating its market capitalization
, which is generated by multiplying the current market price with the number of coins in circulation. So if a certain cryptocurrency has a circulating supply of 1,000,000 coins, which are being traded at $5.00 each, the market cap would be equal to $5,000,000.