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Hyperinflation is a situation in which the supply of a given token is rapidly and significantly increasing, leading to a sharp decline in its value. It can happen for a number of reasons, including an increase in coin production, a high inflation rate pre-programmed into the currency’s code, or a decline in coin demand.

Holders of crypto may suffer a negative effect from hyperinflation because their investments may lose their value. Most cryptocurrencies, however, have a fixed total supply, unlike fiat money. To assist prevent hyperinflation, some of them also have a hard cap or limit on the total number of coins that can be mined.