Bitcoin Scarcity

December 13, 2021

Darko Simunovski content is written in English. Translations into other languages are automated and there may be minor text errors.

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Bitcoin’s history began nearly 13 years ago, as its network launched on January 3, 2009. Back then, Satoshi Nakamoto – the mysterious architect(s) of the project – mined the starting block of the chain, known as the Genesis Block.
One of the critical and most valued features of Bitcoin is its digital scarcity that comes from the fact that no more than 21 million bitcoins could ever be created. Bitcoin is decentralised hard asset money by all means.

btc source:pexels

There are 18.89 million BTC already mined, representing 90% of the total supply. There are less than 2 million bitcoins left to mine after today. However, due to the regular halving events, the self-adjusting difficulty, and other pre-programmed features, it is estimated that this will take quite some time and that the 21 millionth BTC will be “created” in the distant 2140 (10% in Nearly 120 Years)
According to math, the full 100% will be mined in the middle of the next century as the main reason for it is the Bitcoin halving. In short, this is a pre-programmed event occurring every 210,000 blocks (roughly four years as of yet) that slashes the block reward that miners receive in half. As of now, this reward is 6.25 BTC, while in 2024, it will be reduced to 3.125. In comparison, it started at 50 BTC per block in 2009.

btc source:pexels

Another significant feature created to assure bitcoin’s stable speed of producing new coins is the mining difficulty adjustment. Essentially, it’s a process occurring every 2,016 blocks (two weeks) that makes it either more difficult or easier for miners to do their work.
If there are too many miners currently trying to mine new bitcoins, the difficulty adjustment will make it harder for them to receive the rewards. This will ensure that the block creation remains stable.
A valid example of the mining difficulty merits came earlier this year. As China implemented an all-out ban on anything crypto, miners had to close shops and move away.
The hash rate, which is indicative of the robustness of the network, plummeted in the following months, and the block creation was delayed. However, the blockchain went through several consecutive negative adjustments that made it significantly easier for miners to do their job.

While the total supply of 21 million BTCs is expected to be mined next century, not all can even reach the open market because more than 3.5 million bitcoins have been “lost” due to misplacing private keys or even death events.
There’re multiple examples of investors, typically early adopters, who had mined or received substantial quantities of BTC years ago but failed to keep them safe.

In the beginning, investors didn’t pay much attention to their new holdings as they had a little-to-no value at the time, and many have lost the digital keys to the wallet, and they are desperate to find out their passwords.
This only goes to show the importance of keeping your BTC safe, remembering (writing down) the private keys and also highlighting bitcoin’s scarcity even more. After all, nearly 17% of the asset’s total supply has presumably been lost irretrievably, making it even more scarce than it was intended to be.

btc adoptation curve

Digital Scarcity of Bitcoin attracted the instituntional investors like MicroStrategy, Tesla, Grayscale bitcoin ETF’s and others. We saw big buyers during 2021, here are the most prominent investors:

Top publicly listed companies in the world holding Bitcoin
Company Bitcoin held Purchase Cost ($) Current Value ($) Value Increase
1 MicroStrategy Inc 114,042 – 3.16b 5.277 billions 63.3%
2 Tesla 38,300 – 1.329b 1.772 billions 30.4%
3 Galaxy Digital Holdings 14.93mil 691 millions
4 Square 8,027mil 371 millions 65%
5 Marathon Digital Holdings 4,813 150m 222 million 45.3%
6 Coinbase Global 4,502 – 130 million 208 million 56.9%

There is no doubt that Bitcoin has the potential to revolutionize money and is foundation of decentralisation and tool for freedom, how fast it will gain mainstream adoption, remains to be seen one thing is sure that is here to stay and it will stay in future.

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