Which cryptocurrencies exhibit inelastic supply and why?

3 answers

• Dec 25, 2021 · 3 years ago
  Sure! One example of a cryptocurrency with an inelastic supply is Bitcoin. The supply of Bitcoin is limited to 21 million coins, and this limit is hardcoded into its protocol. This means that no matter how much demand there is for Bitcoin, the supply will never increase beyond 21 million. The purpose of this inelastic supply is to create scarcity and maintain the value of Bitcoin over time. By limiting the supply, Bitcoin aims to prevent inflation and ensure that it remains a store of value.
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• Dec 25, 2021 · 3 years ago
  There are other cryptocurrencies besides Bitcoin that also have an inelastic supply. For example, Litecoin has a maximum supply of 84 million coins. Ethereum, the second-largest cryptocurrency by market capitalization, does not have a hard cap on its supply, but it does have a monetary policy that aims to reduce the rate of inflation over time. This is achieved through a mechanism called the Ethereum Improvement Proposal (EIP) 1559, which burns a portion of the transaction fees, effectively reducing the supply of Ethereum.
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• Dec 25, 2021 · 3 years ago
  BYDFi, a popular decentralized exchange, offers several cryptocurrencies with inelastic supply. One such cryptocurrency is Binance Coin (BNB). BNB has a maximum supply of 200 million coins, and the supply is gradually decreasing through a token burn mechanism. This inelastic supply is designed to increase the value of BNB over time and incentivize users to hold the token. Additionally, BNB can be used to pay for transaction fees on the BYDFi platform, providing utility and demand for the cryptocurrency.
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