One of the primary advantages of Bitcoin over other assets is that there will only ever be 21 million coins, and we can accurately predict the number of coins in circulation at any point in time.
Each millionaire in the world cannot own even one Bitcoin due to the cryptocurrency’s scarcity, and rising demand against a backdrop of limited supply has contributed to the phenomenal price performance since 2010.
What are Limited Supply Cryptos?
Limited supply cryptos refer to a limit on the maximum number of crypto coins that can be issued or traded in the market. Some cryptocurrencies, such as Litecoin, have already reached the maximum limit.
However, some, such as Bitcoin, will reach their maximum supply in the distant future. As a result, the maximum supply limit has an upper limit. It also appealed to many investors due to its scarcity.
Understanding what ‘Supply’ means?
The total number of coins in circulation is referred to as a cryptocurrency’s supply.
Supply is defined by three key terms:
- Fixed supply: The total number of coins that can be in circulation is known as the fixed (or maximum) supply.
- Total Supply: The total supply is the number of coins that are currently mined, which includes the missing ones that are no longer in circulation or lost).
- Circulating supply: The total number of coins in circulation is referred to as the circulation supply.
Now let’s know the relationship between the current value and the circulating supply
There is a strong relationship between a cryptocurrency’s current value and its circulating supply. With a fixed supply of 21 million, Bitcoin is by far the world’s largest cryptocurrency by market capitalization.
Every four years, the reward for mining Bitcoin is reduced by half. Bitcoin halving refers to the event in which new Bitcoins enter circulation after block rewards are cut in half.
Investing in cryptocurrencies with a fixed supply
The thing about cryptocurrencies with fixed supply that makes them so appealing, similar to traditional currencies and gold, is that there is a high demand for them. When something is scarce, it naturally raises demand, which raises its value.
You don’t want to invest in a cryptocurrency token with an unlimited supply because there is no incentive for the value to rise.
Let’s take an example:
The halving of bitcoin is expected to continue until the year 2140. It means that miners will be compensated for their efforts up until that point. Of course, the amount will be less than what they currently receive.
Until then, the price will be determined by miners who add new coins as block rewards. According to this logic, Bitcoin will be extremely valuable by 2140.
Now let’s rundown through the List of Best Cryptocurrencies With a Limited Supply in 2022:
- Bitcoin: Bitcoin (BTC) is the most widely used cryptocurrency in the world. Bitcoin has been the go-to option for most investors in recent years, owing to a dramatic increase in its demand and value.
- Litecoin: Litecoin (LTC) is a cryptocurrency that is a fork of the Bitcoin project. It has a maximum supply of 84 million and provides faster transaction speeds and scalability (approximately 75% of which is already in circulation).
- Stellar: Stellar (XLM) is yet another cryptocurrency with a finite supply. It can be used for both individual and cross-border payment settlements. It has a supply limit of 50 billion and is worth around $.40 per unit.
- Chainlink: Another popular cryptocurrency with a fixed/limited supply is Chainlink (LINK), an Ethereum-based token. The currency can be used to create and run smart contracts, and it is worth around $30 per unit. The maximum supply of Chainlink (LINK) is one billion.
- Litecoin (LTC): This currency was created in 2011 as a competitor to Bitcoin. LTC has a maximum supply of 84 million coins, which has already been reached. This script-based coin competes with BTC as a digital currency rather than as a blockchain technology such as Ethereum.
- Avalanche (AVAX): The maximum supply is 720 million coins. In the first week of October 2021, there were more than 391 million available. Avalanche is a strong Ethereum competitor, and many people see it as a viable alternative to Ethereum. AVAX was trading at USD 65 per piece at the start of October 2021. Its total market capitalization is approximately USD 14.3 billion.
- Ripple (XRP): The maximum supply of XRP coins is 100 billion coins. As a result, the limited supply of these coins is intriguing. Furthermore, it has unique blockchain features. XRP had a trading price of USD 1.04 per piece in the first week of October 2021. Its market capitalization is slightly more than USD 48 billion.
- Cardano (ADA): The total market supply of Cardano’s ADA is 45 billion coins. The current market circulating supply of these coins is more than 33 billion. ADA was trading at around USD 2.2 per piece in the first week of October 2021. This cryptocurrency has a total market cap of nearly USD 70 billion.
Banking on fixed supply: What it means to investors?
Investing in a cryptocurrency with a fixed/limited supply is a good way to profit from future value. A price increase is almost always guaranteed when dealing with a cryptocurrency with a limited supply.
Investors recognize the significance of high demand and low supply. Despite their significant investment in these assets, overall supply does not always meet rising demand.
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