Only 4 Million Of The Total 21 Million Bitcoin Left

Conor Maloney
  • Bitcoin was designed to be deflationary - the low supply keeps the prices high due to scarcity.
  • The last Bitcoin is due to be mined in 140 years. 

The 17 millionth Bitcoin is due to be mined today, leaving only 4 million left in the total supply of 21 million. Bitcoin was designed to mimic the properties of natural resources like gold. The scarcity is deliberate, and designed to maintain and increase the value of the currency.

In fact, the rate of mining is slowing all the time - while at the moment, approximately 1800 coins are mined per day with a new block added every ten minutes, the design causes this rate to half every 4 years, thus creating the supply curve seen below.

How is Bitcoin created?

Bitcoin is "mined" by people running powerful computers called mining nodes. Nodes store the blockchain data and mining nodes verify transactions and keep the Bitcoin network operational. The process is called 'proof-of-work' and it is this expensive 'mining' that truly gives bitcoin its economic value.

Transactions are gathered into "blocks" and added to the blockchain in exchange for rewards - to create a block of data, the miners use computing power to guess the correct answer to cryptographic algorithms, which is also a deliberate feature aimed to distribute power evenly and prevent groups from dominating the network, by making it difficult and expensive to mine.

Currently miners are rewarded 12.5 BTC per block compared to 25 BTC two years ago and 50 BTC in the beginning - the rewards and rates decrease proportionately over time, ideally to match the increase in value so as not to give miners too much wealth at once.

The curency is deflationary, meaning that the scarcity generally contributed to the price increasing. Here's a chart made by r/bitcoin mod BashCo portraying the supply vs the inflation. 

Bitcoin supply curve

It's estimated that the last Bitcoin willl be mined in 120 years (2140), but this won't spell the end of the currency - much as we've seen happen already, the only likely outcome is that the price will increase even further due to the supply turning deflationiary as users lose private keys by accident. 

Notable Bitcoin Trader and Whale Not Bullish on the Hyperinflation Narrative

Colin Muller

Highly regarded Bitfinex trader and crypto whale J0E007 is not banking on the hyperinflation narrative, which is a highly popular notion in the cryptoasset industry, implying it's a fairy tale.

Screenshot from 2020-05-26 13-23-22.png(source: Bitfinex pulse)

This narrative, exhibited for example here, proposes that the aggressive fiscal and monetary intervention on the part of many central banks around the world will eventually lead to sharp devaluations in the values of many fiat currencies—and most importantly of the U.S. dollar.

Propagation of this concept of rampant fiat inflation in the cryptoasset space is generally tied to predictions of a huge increase in the price and/or market capitalization of Bitcoin and other cryptos, although most focus on the flagship cryptocurrency.

A Little More Complicated

In his post, JOE007 linked to a recent report from Alhambra Investments, an asset management and financial research outfit.

The report details lead analyst Jeffrey Snider’s view that the dollar is not going anywhere in terms of demand, although definitely not by virtue of the competence of the U.S. Federal Reserve in handling the unfolding economic crisis lit by COVID-19.

Conceptually, first, any strong desire to hold expensive dollar liquidity buffers is drawn from serious mistrust of systemic conditions – including the central bank’s place in them. If you thought Jay Powell well prepared in advance with effective countermeasures standing at the ready, buffers of any size need not apply.

Jeffrey P. Snider

In short, Snider contends that the Fed under chair Jay Powell has not responded appropriately to the emerging crisis with “effective countermeasures at the ready”; and this bungling in turn has led to a higher international demand for US dollars in order to sit on a larger and safer cushion of “expensive dollar liquidity buffers.”

A complicated subject, to say the least. The upshot for J0E007 being that the dollar-collapsing narrative may have some big holes in it—removing the keystone of that popular Bitcoin use-case narrative.

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