The cryptocurrency market is very diverse, so new digital coins appear almost daily. There are two types of digital coins: those with unlimited supply and those with fixed ones. Cryptocurrencies with limited supply have an increased value, and their price can appreciate more over time as they are scarce assets. Many cryptocurrencies have a limited supply, including Bitcoin, Cardano, Binance Coin, Chainlink, Litecoin, XRP, and Avalanche.
Of them all, Bitcoin is the most popular one, as it was the first cryptocurrency created and inspired all the other digital coins that appeared after. This feature can positively impact the Bitcoin price (if we take a look at the Bitcoin prediction), as it can grow with time, especially when digital currencies are no longer launched. In this article, we will explore a few cryptocurrencies with limited supply and the features of the cryptocurrencies with a fixed amount. Keep reading to find out more.
What are the advantages of limited supply?
When a cryptocurrency has a limited supply, it makes all the other people more interested in it because they know that it can hold a part of something that will no longer be produced at some point in the future. Because scarcity drives demand, the digital coins with a fixed supply limit will always be more interesting, as their value can increase. These cryptocurrencies were made to have the same scarcity as precious metals, like gold and silver, and it is no wonder why Bitcoin is often referred to as the crypto gold. Because of this scarcity, the coins are more interesting, and their value can increase over time.
Additionally, another great advantage of limited supply is that it is more resistant to inflation. If fiat money can lose some of its value because of inflation, this will not really happen with cryptocurrencies with a fixed amount. Because individuals will no longer produce new coins after they reach their set value, they naturally resist inflation. Thus, they become attractive options as store-of-value assets, similar to the appeal of precious metals.
Furthermore, because people know that these cryptocurrencies will no longer be issued at some point in the future, they anticipate that their value will rise. This feature can also increase investors’ confidence, as they will know exactly the total supply that will be produced and the one that is in circulation at the moment, which will help them better decide when they want to add a new cryptocurrency to their portfolio. Plus, investors might want to own a piece of something with a finite resource, as it can be seen as a more valuable asset, which can drive its price upwards. Discussions in the best crypto podcast often touch on these dynamics, providing valuable insights into how limited supply can influence market behavior.
What are the most popular cryptocurrencies with limited value?
Bitcoin
Bitcoin is the pioneer cryptocurrency that remains the most popular cryptocurrency in the crypto space, being the one that has inspired a lot of cryptocurrencies that have appeared. Bitcoin has a capped supply of 21 million coins, meaning other digital currencies will no longer be produced once this amount is reached. Bitcoin adds new blocks with the help of a process called mining, where miners are the ones who validate new transactions. Miners need to solve complex mathematical puzzles to be able to do this, and they are rewarded with BTC.
The limited supply of Bitcoin increases its appeal and value, driving its price upwards. Because of the scarcity, individuals will feel like they have something exclusive and rare, so Bitcoin will be an attractive option for anyone who wants to diversify their portfolios.
Binance Coin
Binance Coin is another digital currency with a fixed value of 200 million coins. The Binance Coin is the native token of Binance, the largest cryptocurrency in the world. It was initially developed as an ERC-20 token on Ethereum but moved to its blockchain after some time. Binance Coin can be used for numerous purposes, as with its help, people can pay the fees on Binance so that they will also benefit from lower transaction costs and trading fees. Furthermore, Binance Coin has started to be a means of payment, and numerous platforms and merchants have adopted it more and more.
Cardano
Cardano is an important blockchain with a native token, ADA, and a capped supply of 45 billion. Cardano works on a Proof-of-Stake (PoS) consensus mechanism, which has proven to be more efficient than the Proof-of-Work (PoW) option. Cardano was launched by Charles Hoskinson, one of the co-founders of Ethereum, who left the team because he disagreed with the direction in which Ethereum was headed, so he decided to launch its own blockchain in 2015. Cardano wants to be a better alternative to Ethereum and aims to offer banking services to those unbanked.
XRP
XRP is another digital currency with a capped supply of 100 billion. Both the XRP and its blockchain have been designed to offer better financial transfer options and help investors profit from price fluctuations and use it as a store of value. The benefit of XRP is that it provides faster and cheaper transactions than other cryptocurrencies.
Is investing in a cryptocurrency with a limited supply a good option?
Investing in a cryptocurrency with a limited supply is considered a good option for most people, as it adds scarcity, increasing its value over time and pushing the prices upwards. Because of the scarcity feature, cryptocurrencies are also more resistant to inflation and have a better appeal as a long-term store of value. However, although there are advantages to the capped supply, there are also some disadvantages, represented by the potential market manipulation, where a larger amount of cryptocurrency will be owned only by some holders, which will pose concerns as these blockchains could become more centralized.
