FAQ - Advanced Crypto Concepts
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Advanced Crypto Concepts
What is minting?
Minting is an action that brings an item into existence on the Blockchain, and costs so called “gas” to do so. Minting on CoinOn is lazy, meaning it only occurs when necessary, so:
- When you transfer an item to another account
- When someone buys an item from you
How does “token supply” work?
Firstly let’s start with the term token supply. It’s a number of tokens available. There’s:
- Initial number of tokens available - tokens available initially that would be put to Token Creator’s account.
- Maximum number of tokens available - maximum number of tokens can differ from initial tokens in scenarios when additional tokens need to be minted.
Unique items (NFTs) have a maximum supply of one. It means that only one copy can be ever “minted”. This is what a "non-fungible token" (NFT) usually refers to.
A value higher than one makes your item ownable by multiple people. Each person could have more than one copy. This is what "fungible" means.
What is Market Cap and Fully Diluted Market Cap?
A market capitalization is the current market price of all its outstanding tokens – that is, the coins held by all token holders. If Example Company had 10 million outstanding $EXAMPLE tokens, and 1 $EXAMPLE would be sold for 5 euro, $EXAMPLE's market cap would be 50 million euro.
Fully Diluted Market Cap
Many token creators find themselves in a situation where the number of outstanding tokens could suddenly rise e.g. depending on the Token Creator’s will and ability to increase the number of tokens. If some more Tokens were added, it needs to be accounted for. Let’s say in the case of 500000 $EXAMPLE added with current token price at 5 euro, the fully diluted market cap would be 52.5mln euro. As you can see it is not always an accurate way of measurement, as if all of sudden 0.5mln of $EXAMPLE dumped into circulation would certainly decrease the market value of the $EXAMPLE token. It can still serve as some sort of reality check, so to see how much the token is really worth.