Inflationary vs deflationary cryptocurrencies are two distinct types of digital assets, each with unique mechanisms that influence their value and long-term sustainability in the market.
A cryptocurrency can be classified into several categories: coin, token, stablecoin, wrapped token, and many more. Overall, supply limits are critical in cryptocurrency, whether inflationary or deflationary.
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Understanding Inflationary vs Deflationary Cryptocurrencies
In particular, the inflation of fiat currency is a typical example. It seems reasonable, but it indicates a flawed economy.
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What is an Inflationary Cryptocurrency?
Inflationary cryptocurrency refers to those crypto assets with an ever-increasing supply limit. For instance, Dogecoin is the best example of an inflationary cryptocurrency because it has an unlimited supply limit, and its value continues to increase by millions of DOGE daily through mining. Formerly, Dogecoin was launched to have a supply cap of 100 billion DOGE, but the limit has been extended to more than $132 billion DOGE nowadays.
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Cryptocurrency assets can be included in inflationary cryptocurrencies because of the unlimited supply limit. In addition, the crypto-mining process is popular all over the world. Nowadays, millions upon millions of crypto coins are being circulated daily. It is the main reason why cryptos have an unlimited supply.
Another good example of an inflationary cryptocurrency is Bitcoin. Although Bitcoin is an Inflationary crypto-asset, its supply cap limit will be reached, and then it will become a deflationary coin.
What is Deflationary Cryptocurrency?
Deflationary cryptocurrency refers to crypto assets with a decreasing supply limit. Overall, there are some rare Deflationary crypto coins available in the market.
Over 33 billion ADA crypto coins are already in circulation. When Cardano’s supply limit is exceeded, it will become a deflationary cryptocurrency.
Similarly, the thousandths of cryptocurrencies, such as Bitcoin, Binance Coin, and Algorand, have a definite supply limit. When the supply limit of these cryptocurrencies exceeds, they will become deflationary cryptocurrencies.
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