fixedsupply

Fixedsupply refers to a characteristic of certain digital assets, most notably cryptocurrencies, where the total number of units that will ever exist is predetermined and capped. This means that no new units of the asset can be created beyond the initial issuance or a predefined issuance schedule that eventually terminates.

This scarcity mechanism is often contrasted with traditional fiat currencies, which can be printed or created by central banks without an absolute upper limit, potentially leading to inflation. The fixed supply model aims to mimic the scarcity of precious metals like gold, where the amount available is finite and increases only through costly and time-consuming extraction processes.

Proponents of fixed supply argue that it can contribute to value appreciation over time if demand for the asset increases. This is based on the economic principle of supply and demand, where a limited supply facing growing demand tends to drive up prices. Bitcoin is a prominent example of a cryptocurrency with a fixed supply, capped at 21 million coins.

However, critics point out that fixed supply does not inherently guarantee value. The value of any asset ultimately depends on factors such as adoption, utility, security, and market sentiment. Furthermore, a fixed supply could pose challenges if the asset becomes widely used for transactions, potentially leading to deflationary pressures if the supply cannot keep pace with economic growth or transaction volume.