In the world of cryptocurrencies, supply and supply units have always been topics of scrutiny when it comes to analyzing the potential for a positive price action of a given project. But are these values really a good determinant of the make or break status? Let’s find out:
Defining Supply Units
Even though the term sounds vague and unfamiliar, we all encounter currency supply units every time we touch the stuff. Most, if not all, currencies nowadays use the same system — the main unit (e.g. dollar, euro, pound) and a subunit (e.g. cent, eurocent, penny sterling), representing a fraction of the main unit with two decimal places. Despite that they carry different connotations, both are still part of the same currency, with 1 main unit being composed of 100 subunits. Therefore, as we all know, 1 cent/ eurocent/ penny is just 0.01 dollar/ euros/ pound sterling and vice versa.
The same logic illustrated above applies to cryptocurrencies as well. The key difference is the number of subunits with 8 being the number of decimal spaces typically chosen. Looking at the most prominent cryptocurrency Bitcoin, this is exactly the case — one Bitcoin has 8 decimal places, resulting in a floating-point value of 1.00000000, with the smallest unit called Satoshi to honor its creator. In comparison Ethereum has 18 decimals, or 1.000000000000000000.
What If We Removed the Decimals?
Naturally, the use of the subunits is a matter of convenience and precision above anything else. There are quite a few examples throughout history when such were not used or were dropped altogether. As a matter of fact, decimals were first introduced in currencies around the world as late as the 18th century — some 100 years after the invention of paper money. Before that, subunits were based on the proportion of raw metals used to make them or were non-existent. Their sole purpose was to make it easier to transact with physical currencies, so you can price items more precisely and be able to return the correct amount without losing value in the process — i.e. return their change.
Since the advent of digital money, however, this is becoming ever so irrelevant in this context. You see when money is digital, all transactions happen without a physical medium — you don’t need to return an actual coin or a paper note and neither do you need to base it on a fraction of raw metal. You can just have the currency as one whole main unit, without decimalisation and it wouldn’t make a difference — you will have the same amount, just no dot, comma, or whatsoever (depending on the standard).
Decimalised vs. Non-decimalised Currencies
Going back to the starting question about cryptocurrency supply, it is essential to understand how to effectively compare these two types of currencies. A mistake often made is comparing the supply in terms of main units only which represents a skewed picture at best. In reality, in order to effectively compare the two, it is vital to do so with the smallest unit available i.e. subunit with subunit, main unit with main unit, or subunit with main unit if no subunits are used by the currency.
Knowing this, let’s try to reevaluate the differences in supply, in order to fix our skewed perspective and compare the non-decimalised Dentacoin with some of the most popular decimalised cryptocurrencies. Here is a quick breakdown (amounts valid as of April 29, 2020):
Naturally, it’s a startling difference with unpronounceable numbers all around. If you are keen on finding out the actual names, you can refer to this table here, as it seems the naming standard varies throughout the world. The difference is even more staggering when Ethereum to Dentacoin units. Ethereum has 13 trillion (13,996,214,182,102) times more supply units than Dentacoin’s 7.9 trillion, while for Bitcoin that is less of a mouthful but still the significant 265 times.
Moreover, 70% of the Dentacoin supply is locked, i.e. practically non-existent at the moment, and annual coin burns are considered to further balance supply and adoption. Add this on top of the supply unit comparison above, and ask yourself: Is 7.9 trillion really too much or has it just been blown out of proportion due to incorrect comparisons? You decide.
Originally published at Official Dentacoin (DCN) Blog | Dentacoin Foundation.