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What Does it Mean When a Cryptocurrency is “Hard Capped?”

By Evan Jones11/27/2023


When you’re first researching a cryptocurrency for investment purposes, one of the most important things to take into account is the asset’s supply and what that supply will look like over time. There are a variety of terms you’ll encounter when doing this research such as circulating supply, maximum supply, and market capitalization. You may also find out an asset is “hard capped”, but what does that mean? We’ll discuss all of the above in this guide. 

Supply Metrics for Digital Assets

Circulating Supply

Circulating supply is the amount of a crypto asset that is currently in circulation. Cryptocurrencies, like fiat currencies, have a circulating supply. An asset’s circulating supply number will not include any of that asset that is yet to be mined or has been burned or destroyed through a particular mechanism of that asset.

For example, Bitcoin currently has a circulating supply of about 19.5 million Bitcoins, meaning that of the total Bitcoin that can exist (max supply), 19.5 million are currently circulating. Bitcoin’s max supply is 21 million.

Maximum Supply

As you have likely figured out, max supply is the maximum amount of a particular digital asset that can be mined or exist in circulation. An asset’s max supply cannot be changed, and once the max supply is reached there is no more of the asset to be distributed through any avenue other than purchase from another holder.

Max supply can go down over time though. Assets like Binance Coin (BNB) have a max supply that was immediately available in circulation. Part of Binance’s consensus mechanism is to buy back and burn BNB tokens each quarter as a way to keep demand for the asset up and make it deflationary. So, while BNB started with a max supply of 200 million, its circulating supply is currently only about 151 million, and will only continue to go down. BNB’s circulating supply is always its max supply.

Market Capitalization

Market Capitalization is the total price of an asset as a whole. It’s based on the circulating supply of that asset multiplied by that asset’s current price. For example, Bitcoin’s circulating supply of 19.5 million BTC is multiplied by its current price to get the current market cap for Bitcoin. It’s important to keep in mind an asset’s circulating and max supply when assessing cryptocurrency values.

For example, Cardano (ADA) currently has a circulating supply of about 36 billion, with a max supply of 45 billion. This means that when Bitcoin and Cardano are both at max supply there will be 2,100x ADA compared to BTC. So, when you look at the price of ADA compared to BTC (or any other asset) it is important to remember the difference in supply. 

So, What’s “Hard Capped”?

Ostensibly, a hard capped cryptocurrency is just one with a defined maximum supply. As long as there’s no change in that maximum supply, it is “hard capped” at the number. For Bitcoin, that number is hard capped at 21 million BTC. 

There will never be more than 21 million BTC circulating on the network (less when you take into account the Bitcoin that’s been lost forever) barring some kind of consensus among users to change it. However, this would be a hard fork, much like when Bitcoin forked into Bitcoin (BTC) and Bitcoin Cash (BCH), meaning the original BTC would still be hard capped even if the new network had a different maximum supply.

Are All Assets Hard Capped?

No, not all assets are hard capped. This can be for a variety of reasons, which we’ll discuss now.

Stablecoins, like Tether (USDT) or USD Coin (USDC), have a circulating supply but no max supply. This is because they are simply pegged to USD at a one to one ratio, meaning that it can be created by people endlessly as long as they have the funds to convert into the stablecoins.

Dogecoin (DOGE) is completely uncapped as well, as it’s part of the protocol. There will be an infinite amount of Dogecoin put into circulation, as long as there are people running the network and adding new blocks.

Ethereum (ETH) doesn’t have a hard cap either, but it’s not endlessly inflationary. The Ethereum developers are not sure of the demands the network will require if and when fully functioning, so because ETH is burned as part of most network functions, they haven’t set a cap. Instead, the issuance of ETH is lowered in proportion to its current value, meaning that the cheaper the price of ETH the greater the issuance, and vice versa.

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Evan Jones


Evan entered the crypto scene in 2017, attracted to the many disruptive possibilities that blockchain could have on current world systems. He has a keen interest in decentralized services, payment processing, and viable NFT use cases such as event ticketing. He spends his days writing with his dog Kobe under his feet, if not on his lap.

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