Discussing supply inflation in general

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As the data shows, inflation rates are highly different across these 19 coins and tokens. Some of them have very small inflation rates (Tron, Bitcoin Cash), while some of them even have zero inflation into their circulating supply (NEM, IOTA). Others started with a very high inflation rate (Litecoin, Monero) but it then decreased over time. As a stable coin, Tether is an outlier in this dataset, since an increase of its circulating supply theoretically means that more tokens backed by fiat money are entering the crypto space (whether that might be true or not shall be the subject of other articles).The circulating supply displayed for each coin/token is mostly defined by the projects themselves. Let’s say a project defines, that their total supply equals their circulating supply and therefore all coins have been distributed and are in circulation. It means, that there is no inflation currently and there will be no inflation in the future – a good sign for investors. However, it is tough to determine, whether or not a certain amount of the circulating supply has been held by the team from the start and is more or less not distributed and therefore shouldn’t count as part of the circulating supply.Furthermore, attracting investors with an inflation rate of zero is not the only incentive of declaring all coins in the total supply as circulating supply. The market cap of a project is calculated by its circulating supply times its current price. If a project declares, that all their coins are in circulation even though 50% of them haven’t been distributed originally, their market cap is 2x higher than it would be, if they will define their circulating supply correctly. Since the most common ranking method for cryptocurrencies is by market cap, a project can boost its placement in these rankings with this method.Adding to that, I think it also important to distinguish between a planned inflation and a rather unplanned inflation. If a coin is mined for example, its mining rewards might be already determined for the next few years or even decades to come. Both the miners and the investors know, how many coins will be released at which point in time and can act accordingly. When it comes to pre-mined tokens though, it can be hard to determine, when these tokens will be put into the circulating supply, especially if the vesting period is not scheduled via a smart contract. Events like a wallet getting hacked or a project running out of funds can lead to a massive dumping of these tokens on the market, which nobody could predict before.However, a high inflation doesn’t matter so much, if there is a high demand. Bitcoin had a very high inflation rate of 208% in 2010 and 59% in 2011, but managed to go up from being basically worthless to 30 US Dollars in mid-2011. As another example, the price of Zcash increased by almost 10x in 2017, even though the circulating supply increased by 765% in the same year. It has to be stated though, that most cryptocurrencies don’t have a very high demand and are just speculation objects, which leads to prices massively decreasing if a bigger amount of yet undistributed coins and tokens hits the market.Inflation of the circulating supply is a factor, that can have a fundamental influence to the price, even though it is not often considered in price analyses. Bitcoin’s and Ethereum’s increases in circulating supply have been decreasing over time percentage-wise. Other coins have had various inflation rates, ranging from zero inflation to a very high inflation above 25%. Due to the circulating supply being determined mostly by the projects themselves, it can be also used to manipulate investors’ expectations and the project’s rating in rankings by market cap. This article showed, how different the increases in circulating supply are across all coins and tokens in CoinMarketCap’s top 35.