The unknown heroes of cryptocurrency: Understand the difference between food in circulation and total food
When it comes to understanding the world of cryptocurrencies, two terms are often launched without thinking: “food in circulation” and “total supply”. Although the two refer to the total quantity of coins from a piece in circulation, they represent different concepts which are crucial to grasp the complexities of the cryptocurrency economy.
** What is food in circulation?
References of supply in circulation to the number of parts which are currently used or exchanged. It represents the number of documents available for purchase, exchange or use by individuals and institutions. This includes not only physical parts in circulation, but also digital tokens stored on exchanges, wallets and other online platforms.
For example, if you buy a bitcoin, you mainly buy 1 cryptocurrency unit, which is then added to your “food in circulation”. If you exchange a bitcoin for another part, the supply of total circulation remains the same.
** What is total offer?
The total offer, on the other hand, refers to the total number of parts that will never be created. It represents a fixed amount which will never change, regardless of fluctuations or market demand. This term is often used to describe the concept of “total wealth” in the economy of cryptocurrencies.
The total offer of a particular part is generally fixed to its underlying assets, such as gold or fiduciary currency. For example, the total bitcoin offer is capped at 21 million units, ensuring that there will always be enough coins in circulation for market demand.
Key differences
So what are the main differences between power supply and total food? Here are some key distinctions:
* Power in circulation vs. Total food
: The supply in circulation represents the current number of parts available for use or trading, while the total references of the offer to the fixed amount that will never be created.
* Market impact : The supply in circulation is subject to market fluctuations and changes in demand, which can have an impact on its price. On the other hand, the total offer is a fixed value which remains unchanged whatever the conditions of the market.
* Liquidity : Food in circulation can be affected by liquidity levels on exchanges, as parts that are easily harmful can see an increase in the power supply. The total offer, however, is not directly influenced by liquidity.
Implications and applications
Understand the difference between the supply in circulation and the total offer has important implications for investors, traders and market players:
* Investment strategies : Investors can use this knowledge to inform their investment decisions, such as the purchase or sale of parts depending on changing prices.
* Market analysis : Understanding the supply in circulation and the total offer helps analysts to analyze market trends and identify potential risks and opportunities.
* Regulatory compliance : Cryptocurrency exchanges and wallets must comply with regulatory requirements related to supply and total food.
In conclusion, the entry of the distinction between the supply of circulation and the total supply is essential for navigating in the complex world of the cryptocurrency economy. By understanding these two concepts, individuals can make more informed decisions on the investment, trading and the use of cryptocurrencies in their daily life.