Even though miners are rewarded with fresh Bitcoin on a regular basis, there is a hard-capped total supply of just 21.000.000. It’s important to know that
- Today we’re at around 18.6 million mined Bitcoin
- Through mining, the supply keeps increasing, but at a rate less than 2% per year (like gold)
- But this production rate halves every +/- 4 years (2024 is the next Halving) and will eventually come to a complete stop (at 21 million)
The economic law of ‘Supply and Demand‘ implies both the circulating supply ànd increased demand will probably make it harder (read: more expensive) to get a full BTC over time. By which I mean 100.000.000 ‘satoshis’, the smallest, divisible units of Bitcoin.
Now keep in mind the demand might keep rising for o-so many reasons:
- Every day new people and get acquainted with the internet and eventually get to know and understand Bitcoin
- Increased globalization requires (large) international transactions without the hassle of exchange rates, transportation, borders, regimes, middle-men, banks…
- New people get enough financial means to get a piece of the Bitcoin pie
- People get stuck in a country suffering strong (hyper)inflation and they look for a way to preserve the value of their savings
- Private long-term Investors
- Institutional investors
- Want to jump on the bandwagon during a parabolic rally
- and so forth…
But the supply actually keeps reducing:
The strength and weakness of Bitcoin is that you become your own bank. You get the keys to your own, unhackable vault: A wallet with a private key. It’s your responsibility. But once said key is lost, the funds in the wallet can NEVER be retrieved. Lost coins are locked and gone forever, actually reducing the supply. Believe me when I say that many, perhaps millions of Bitcoins have already been lost:
- Someone dying, without telling anybody how to get to their coins
- Hard drives dying containing private keys, without back-up.
- Encrypted computers stolen, containing private keys without (cloud) back-up.
- Faulty transactions to locked/inactive/erroneous wallets
- Natural disasters destroying paper wallets and/or drives
- People forgetting they actually have Bitcoin, let alone remembering their private key (yes it happens)
- Funds forever stuck on exchanges due to lost username/passwords or lost 2FA ‘secret keys’ (this has happened way too often)
- Remaining ‘dust’ on exchanges. Imagine someone trying to withdraw their last ‘0.03’ bit of Bitcoin in 2016. The transaction fees would have been too high. Or it just wouldn’t have been worth your time.
But what seemed like ‘dust’ back then, is now worth much more.
- When Bitcoin was still dirt-cheap back in 2009-2010 people just didn’t care if they’d lose 1.000 BTC, worth maybe a dollar. Remember, in 2010 some guy bought two pizzas in Florida for 10,000 BTC. (Which is getting close to this episode of Futurama)
- Confiscated (and sometimes destroyed) Bitcoins by governments
I strongly reccomend you to take a look at the Bitcoin Richlist of dormant addresses. It’s extremely impressive but may also be a good indicator as to what amounts I’m talking about. I sincerely hope for these people they still have their keys, but I doubt it for most of them.
Finally keep in mind
This leaves only 0.00225 BTC per person on this planet. However: a few hundred, perhaps one thousand “whales” hold most of the ‘non-lost’ Bitcoin. And then there are the hundreds of thousands of people who own at least 1 to 50 BTC and will perhaps never sell.
Makes you think. I remember doubting Bitcoin at some points in the past few years, but this list has me convinced it’s here to stay:
- Bitcoin has value (that what people ‘believe’ its worth, that what people payed for it and of course: the cost of energy)
- Bitcoin is an easy way to send any value from A to B across the planet to anybody. Banked or unbanked, within minutes and at low cost.
- Bitcoin knows no discrimination.
- Bitcoin is 100% tamper-proof. You can not fake or fraude a Bitcoin transaction.
- Bitcoin is hyper portable. Even by memory.
- Bitcoin knows no borders.
- Bitcoin knows no regimes.
- Bitcoin knows no central banks.
- Bitcoin needs no expensive vault
- Bitcoin knows no ‘downtime’ (just slow transactions)
- Bitcoin is perfectly traceable.
- Bitcoin does not need intermediaries.
- Bitcoin is deflationary, but highly divisible.
- Bitcoin can’t be unlimited printed.
Now there’s this fact (just in the USA): Every day, the Bureau prints approximately 38 million pieces of paper money. About 45% of this production are $1 bills and 25% are $20 bills. The rest of the production is divided between $5, $10, $50, and $100 bills. (source) The same happens in every continent. And especially since Covid, printing -and therefore inflation- has gone through the roof.
So I’m asking you: Would you rather have 30.000 USD or 1 BTC? (or whatever its current price is)
Or let me rephrase: It’s 2035: which holds most value: 30.000 USD or 1 BTC?
I don’t want you to take this article as ‘FOMO’ (fear of missing out) investment advice. Investing is always risky and your own, full responsibility. Never make any hasty decisions you are willing to regret.