Maximum Supply

Maximum supply refers to the total number of coins or tokens that will ever be created for a particular cryptocurrency. This limit is set by the project's protocol and is designed to ensure scarcity, much like how the total supply of gold is finite. For example, Bitcoin has a maximum supply of 21 million coins, meaning that once all 21 million have been mined, no more will ever be produced. This built-in scarcity is one of the factors that contribute to Bitcoin’s value, as it creates a supply constraint that can drive up demand and price over time.

The concept of maximum supply is crucial for understanding the long-term value proposition of a cryptocurrency. Cryptocurrencies with a limited maximum supply are often seen as a hedge against inflation, as the supply cannot be increased beyond the predetermined limit. This is in contrast to traditional fiat currencies, which can be printed in unlimited quantities by central banks, potentially leading to devaluation. Investors often view cryptocurrencies with a capped supply as a more stable store of value, particularly in times of economic uncertainty.