How Many Bitcoins Are There?
Guest article by James Page
See also: ¿Cuántos Bitcoins hay?
By now, everyone who is even remotely familiar with Bitcoin and the way it functions is aware that the number of available bitcoins doesn’t stretch out to infinity and that there is a finite number coded in the coin’s programming.
Where some people get confused is why a digital coin would have a finite number set in place. Isn’t it more profitable to just keep going until the wheels fall off? Well, not exactly. Bitcoin’s scarcity is what gives it its value on the market and which makes it desirable. If everyone could have it in any amount they like, then interest and value would fade.
Bitcoin follows the scarcity model of gold. Gold retains its value because it does not come in infinite supplies. Also, the scarcity of Bitcoin protects it from inflation.
Why Was Bitcoin Created?
But why Bitcoin? What prompted the creation of digital currencies in the first place? Bitcoin entered the scene in 2009, on the heels of the global economic crisis of 2008.
There are several main reasons for the inception and fast, widespread acceptance of cryptocurrency:
- The multiple fees that a transaction is subject to in order to be processed and reach its destination via regular banks;
- Central banks had more control and information of the users’ funds than users themselves — even though they were quite susceptible to breaches and hacks;
- Risky investments on the part of banks using the clients’ money;
- Regaining control over one’s own funds.
By transferring funds through the banking system, the money and goods that are being transferred are subject to processing and handling fees, among others. There was also a growing concern among trustees and users as to where and how banks are spending user funds and disclosing user data.
We don’t need to look any further than Fannie Mae and Freddie Mac bulk purchases of Alt-A mortgages during 2004, the Basel III bill that was passed in November of 2010, and the passing of the Dodd-Frank Act, with which the Federal Reserve Bank gained complete insight into the private banking sector.
Cryptocurrency offered an alternative by taking the middlemen completely out of the equation and gave control and power over an asset back to the user. Now, for the first time since people carried pouches full of gold and silver coins, users are able to store, keep, manage, and spend their assets as they see fit. It was only a matter of time before decentralized banking was going to take over and even so, most of us never saw it coming.
How Many Bitcoins Have Been Mined?
Bitcoin’s finite coin number is set at 21 million. This makes it scarcer than gold. Even though gold is mined at a slow pace, new gold minerals are being naturally formed regardless, so the supply isn’t finite in the strict sense of the word. BTC, on the other hand, is absolutely finite.
Nevertheless, the 21 million bitcoins aren’t on the market and available for purchase. As of today, the number of mined Bitcoins is close to 19 million.
Users can refer to CoinMarketCap for the latest on circulating supplies.
What is Bitcoin Halving?
In a little more than a decade, we have managed to mine over 85% of the total bitcoins, however, these last 15% — 10% may take up to 100 years to mine. That makes no sense, does it? Well it’s about to — welcome to halving.
The rewards that miners get for a single coin halves roughly every four years. Every time the miner rewards are halved and decreased, Bitcoin mining also tends to become more competitive.
This raises the question whether miners will even be interested in mining in the future at all as rewards decrease and difficulty increases. Bitcoin’s last supplies might never see the light of day, as they hold the risk of becoming unjustifiable in themes of effort and resource and gains in value.
What Will Happen When All Bitcoins Are Mined?
What if all Bitcoins are mined, what happens to the miners then? There will be no new BTC inserted into the network and no network infrastructure to speak of. After all, it’s the miners that keep the Bitcoin blockchain network up and running. The Bitcoin network sets aside an annual $3.3 billion in BTC for miners’ network fees.
In the Bitcoin White Paper, Bitcoin’s creator/s Satoshi Nakamoto suggests that when this moment comes, miners will be incentivized to keep going due to transaction fees instead of network fees. Though this may be the case, it does sound a lot like the tax model that the centralized economy relies on today. So maybe give it another 100 years, and we’re bound to come up with something better by then.
Perhaps, one possible solution for the future is that Bitcoin developers and miners could agree and change the code at some point that Satoshi’s approximately 1 million bitcoins could be used as a buffer if transaction fees are not enough to incentivize miners. Those 1 million bitcoins would last for quite a bit of time.
How Many Bitcoins Have Been Lost?
There is also the issue of lost bitcoins. Even though bitcoins aren’t physical objects that can fall out of your pockets, they still may get misplaced and lost. No one knows for certain how many Bitcoins are unaccounted for because of the decentralized nature of the blockchain. Lost coins can easily be confused with long-term holding, as it is very difficult to draw a clear line of which is which.
In a transaction from a couple of years ago, 40 BTC were transferred from what many presume to be Nakamoto’s wallet address to an unknown wallet. These bitcoins have lain dormant since 2009 and users can hold BTC for as long as they want. So, no one can say for sure if an asset is indeed lost because no one can verify who has access to certain wallets.
Satoshi also has about 1 million BTC that have never been moved since the introduction of the currency. Of course, there are also the instances of forgotten passwords, lost hardware wallets (thumb drives), and exploding hard drives, but these losses shouldn’t amount to astronomical numbers.
How Many Bitcoins Are There?
It should be simple, right? Take the number of total available bitcoins, subtract lost, or presumably lost coins, and what’s left is the available supply of bitcoins on the market. In theory, yes. However, that’s not the full picture.
Bitcoin’s availability depends largely on the sellers and buyers, on supply and demand.
Not all available Bitcoins are for sale, which makes them quite unavailable until further notice. In recent times, more and more traders have turned to holding, which has lowered the true number of available bitcoins.
A Few Words Before You Go…
Bitcoin’s source code is programmed to have finite supply. After the 21 million bitcoins have been mined there technically won’t be any other bitcoins available, ever. Nonetheless, this is not set in stone. The Bitcoin source code can change and create a totally new landscape in the future. This may happen due to a number of reasons, be it relevance, outrageous demand, to incentivize miners to keep the Bitcoin network up and running, or reasons that have yet to come to light.
As a trader, you should always consider this when deciding to go all in and invest a considerable sum into Bitcoin. The crypto industry is most unpredictable. Even though it may seem like a lifetime has gone by because of the fast pace of the crypto industry, we shouldn’t forget that it’s still a very new branch. It’s been around for only a decade, and the chips are yet to fall into place.
