How does the concept of no dilution apply to digital currencies?

1 answers

• Dec 15, 2021 · 3 years ago
  No dilution is a fundamental concept in digital currencies, and it refers to the fact that the total supply of a particular cryptocurrency is fixed and cannot be increased. This means that there is no possibility of diluting the value of the currency by creating more units. Unlike traditional fiat currencies, where central banks can print more money, digital currencies have a predetermined supply cap. This limited supply can contribute to the scarcity and potential value appreciation of digital currencies. It also means that the price of a digital currency is influenced by supply and demand dynamics. If the demand for a digital currency increases and the supply remains fixed, the price is likely to rise. Conversely, if the demand decreases, the price may fall. Overall, the concept of no dilution is an important aspect of digital currencies that helps maintain their value and potential as a store of wealth.
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