CryptoURANUS Economics: Hidden Cap: Defined in CryptoCurrency


Thursday, May 6, 2021

Hidden Cap: Defined in CryptoCurrency

Hidden Cap: Defined in CryptoCurrency


Hidden cap is an unknown limit to the amount of money a cryptocurrency can receive from investors in its Initial Coin Offering (ICO). 

An ICO is the limited-time process by which new cryptocurrencies make their coins publicly known and begin selling them directly to people. People invest their money in these coins in the hopes that they will later be worth many times more that what was paid. 

The circumstances and limits of a hidden cap are created and known only by the development team. 

The purpose of a hidden cap is to allow smaller investors a chance to put their money into a new cryptocurrency by discouraging very wealthy investors from putting in large amounts of money. 

Because large investors want to know the total supply of an asset before investing, a hidden cap prevents this awareness and can limit how much they are willing to spend.

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