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Supply
The supply of cryptocurrencies is generally limited and predictable, while the supply of government currencies is generally controlled by central banks and can be increased or decreased at any time.
Imagine that cryptocurrencies are like a cake made with ingredients measured accurately, where the recipe is known and the amount of cake is limited. On the other hand, government coins would be like a pizza dough, where the cook (central bank) can add or withdraw ingredients (money) at any time, thus changing the size of the pizza (coin offer).
Another difference is how the offer is controlled. In the case of cryptocurrencies, the offer is determined by the network itself, through the consensus algorithm used. In the case of government currencies, it is the monetary authority, such as the central bank, that decides the supply of currency. While the supply of cryptocurrencies is known and predictable, the supply of government currencies can be increased or decreased depending on the economic needs of the country. This can affect inflation and the value of the currency.
It is through supply that you can estimate the price and actual value of a cryptocurrency or a government currency, it is no use for a currency to be too cheap and have a very large supply, because the more coins are supplied and played on the market, the lower the price per unit.
It is through supply that you can estimate the price and actual value of a cryptocurrency or a government currency, it is no use for a currency to be too cheap and have a very large supply, because the more coins are supplied and played on the market, the lower the price per unit.
Some of the best known cryptocurrencies with limited supply are:
Bitcoin: The maximum supply offer of Bitcoin is 21 million units, and so far, about 18.7 million have been mined. Bitcoin supply is reduced every 210,000 blocks mined, through the process known as "halving".
Ethereum: The maximum supply of Ethereum is 120 million units, and so far, about 115 million have been mined. The Ethereum offering does not have a "halving" scheduled, but the Ethereum team is working on a migration to the Proof of Stake consensus algorithm, which may affect the offer in the future.
Litecoin: Litecoin's maximum offer is 84 million units, and so far, about 67 million have been mined. Litecoin's supply is reduced every 840,000 blocks mined, through the process known as "halving".
