How Is ‘Total Supply’ And ‘Circulating Supply’ Calculated?
By JEREMY ‘NERDiT’ DIXON on ALTCOIN MAGAZINE
The ‘Total Supply’ metric is not always set in stone. Some projects don’t have a finite, or total supply. However, most projects do. Bitcoin for example — has a ‘Total Supply’ of 21,000,000 (21 Million) BTC. There will only ever exist 21 Million total Bitcoins.
How is this different than ‘Circulating Supply’?
Circulating Supply is the total amount of an asset that currently, at any given moment, exists in, well — circulation!
Notice in the above screenshot of Bitcoin from coinmarketcap.com, you can see that there were 17,775,926 BTC currently in circulation at that time. The speed in which a particular currency is released into circulation is referred to as the ‘emission rate’. Most of the time this correlates directly to the ‘Block Reward’ amount of any given chain. However, many projects have a block reward that changes over time or not at all. The Bitcoin block reward is cut in half every few years — this is called a ‘Halving’ and is important because it slows the emission rate, therefore, controlling the supply. There are many different strategies for controlling the emission rate that I will cover more in-depth in another piece about block rewards.
The current block reward for Bitcoin is 12.5 BTC. That means that currently, every time a block is solved (roughly every 10 minutes for Bitcoin) 12.5 new BTC are created and effectively added to the total circulating supply.
Today we briefly covered how both total supply and circulating supply are calculated. These concepts may seem simple to many of you, but the fact remains that many people are still learning this stuff — and knowledge is key!
Cheers!
Jeremy ‘NERDiT’ Dixon
