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Unknown heroes of cryptocurrency: Understand the difference between food in circulation and total food
When it comes to understanding the world of cryptocurrencies, twice two terms are launched without too many thoughts: “circulation of supply” and “supply”. Although the two refer to the total amount of coins in circulation, they represent different concepts which are crucial to understand the complexities of the cryptocurrency economy.
What is food in circulation?
The circulation of circulation refers to the number of parts currently used or exchanged. Represents the number of currencies available for purchase, exchange or use by people and natural institutions. This includes not only physical parts in circulation, but also digital fleas stored on exchanges, wallets and other online platforms.
For example, if you buy a bitcoin, you are mainly bought 1 cryptocurrency unit, which is then added to “food in circulation”. If you change a bitcoin for another currency, the total traffic power remains the same.
What is the total offer?
On the other hand, the total offer refers to the total number of parts that will never be created. It represents a fixed amount that 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 currency is generally linked to its basic asset, such as gold or fiduciary currency. For example, the total bitcoin offer is limited to 21 million units, ensuring that there will always be enough traffic parts for market demand.
Key differences
So what are the main differences between circulating power and total power? Here are some key distinctions:
* The supply in circulation to the total offer
: The supply in circulation represents the current number of currencies available for use or trading, while the total offer refers to the fixed quantity that will never be created.
* Market impact : The traffic supply is subject to market fluctuations and changes, which can affect its price. Instead, total supply is a fixed value that remains unchanged regardless of market conditions.
* Liquidity : Food in circulation can be assigned by liquidity levels to exchanges, because parts that can be easily sold can see an increase in the supply in circulation. However, the total offer is not directly influenced by liquidity.
Implications and applications
Understand the difference between the circulating offer 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 price changes.
* Market analysis : Understanding the circulating and 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 linked to supply and total food.
In conclusion, the understanding of the distinction between the supply of circulation and the total supply is essential to travel the economy of cryptocurrency in the complex world. Including these two concepts, individuals can make more informed decisions on investments, trade and use of cryptocurrencies in their daily lives.