👉 Fixed Supply (Limited)

Definition: Refers to cryptocurrencies that have a predetermined maximum number of coins or tokens that will never be exceeded. Once this limit is reached, no more units can be created.

Key features: 📌

- Programmed scarcity: As in Bitcoin, whose maximum supply is 21 million BTC, creating an analogy with gold ("digital gold").

-Protection against inflation: By not being able to issue more units, devaluation due to an increase in supply is avoided.

- Effect on value: Scarcity can drive up the price if demand remains the same or increases (law of supply and demand).

- Notable examples: Bitcoin (21 million), Bitcoin Cash (21 million), Litecoin (84 million), XRP (100 billion).

Associated mechanisms: 📌

- Halving (in Bitcoin): Periodic reduction of the mining reward to control issuance.

- Token burning: Some projects periodically destroy tokens to reduce the circulating supply.

👉 Unlimited Supply

Definition: Cryptocurrencies without a defined maximum cap, where new units can be continuously created, either at a fixed or variable rate.

Key features: 📌

- Potential inflation: Continuous creation of new units can dilute the value of existing ones if demand does not grow proportionally.

- Monetary flexibility: Allows adjusting supply according to network needs (e.g., rewards to validators).

- Possible stability: Some projects argue that constant issuance may favor use as a medium of exchange.

- Notable examples: Ethereum (no maximum limit, but with limited annual issuance), Dogecoin (continuous issuance).

Associated mechanisms: 📌

- Controlled annual issuance (like the ~18 million ETH per year).

- Burning mechanisms to counteract inflation (Ethereum implements burning a portion of fees).

📍Conclusion📍

Both have advantages and disadvantages, and their effectiveness largely depends on the adoption, utility, and management of each project.

For investors, understanding these differences is essential to evaluate the long-term potential of a cryptocurrency and make informed decisions based on their financial goals and risk tolerance.

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