Bitcoin has turned out to be the most valuable cryptocurrency in the world. The fact that most companies and businesses around the have embraced the use of Bitcoin has increased its popularity significantly. However, what makes Bitcoin even more popular is the fact that its total limit is capped at 21 million coins.
The Bitcoin blockchain is incapable of minting new coins or getting rid of the ones already in supply (though you can burn coins by sending them to a wallet that no one has the private keys to). Mining is the only way of adding new, untouched Bitcoins into circulation. However, as more Bitcoins are released through mining, mining difficulty increases. Over time as more miners compete to mine Bitcoin, fewer and fewer “new” Bitcoins will enter into circulation especially when factoring in the halving.
How many Bitcoins are there right now?
The total amount of Bitcoins that have been mined and are in circulation is [coinmc type=”supply” coin=”bitcoin”]. The number of Bitcoins that will ever exist [coinmc type=”totalsupply” coin=”bitcoin”]. This however doesn’t mean that all of them are in use. Some of them have likely been lost forever, stuck in wallets that cannot be accessed or on hard drives that have found their way to the landfill.
How many Bitcoins are lost?
Out of the [coinmc type=”supply” coin=”bitcoin”] that have been mined, it is estimated that 4 million BTC are lost while a total of one million are alleged to have been stolen through various hacking incidents and heists that have occurred over the years.
That means there are likely only 15 million BTC that are genuinely in circulation. It is also important to note about the “Whales” – people who own huge amounts of Bitcoins and hidden away in their wallets. Among such Whales is the founder of Bitcoin called Satoshi Nakamoto who is said to be in possession of 1 million Bitcoins – equivalent to about 10 billion US dollars.
It is estimated that approximately 1600 whales own more than 5 million bitcoins – a figure that’s almost 28% of the total Bitcoins in circulation.
How much time is required to mine one Bitcoin?
The average time of mining each BTC is 10 minutes. The rigs creating the new block divide the reward among themselves. The current mining reward for Bitcoin is 6.25 BTC per block but is bound to change as a result of the halving process. The speed of mining generally depends on the equipment being used to mine.1
The higher the processing power of the machine being used, the more BTC will be processed. Several computer manufacturers have tailor-made machines for Bitcoin mining.
The Bitcoin mining reward
Initially, when Bitcoin was first introduced, miners were rewarded with a generous amount of 50 bitcoins for each block they successfully mined. This reward process continues until a total of 21 million bitcoins are in circulation. Once this number is reached, the bitcoin reward will cease, and miners will be rewarded primarily through transaction fees paid for the work they do.
Approximately every four years, or after every 210,000 blocks are mined, the mining reward is halved. This means that the number of bitcoins awarded to miners for each block they mine is cut in half. The first halving occurred in 2012, reducing the reward from 50 bitcoins to 25 bitcoins. The second halving took place in 2016, reducing the reward to 12.5 bitcoins. The most recent halving occurred in May 2020, bringing the reward down to 6.25 bitcoins.1
Impact of Bitcoin’s Supply Algorithm
Bitcoin’s supply algorithm plays a crucial role in shaping its price dynamics. Unlike traditional currencies, Bitcoin cannot adjust its production rate to meet changes in demand. This means that if demand for Bitcoin surges, the supply cannot increase to match it. Conversely, if demand plummets, the supply remains unaffected.
This fixed supply algorithm can lead to periods of volatility in the Bitcoin market. When demand exceeds supply, the price tends to rise, as witnessed during the historic bull runs. Conversely, when demand wanes, the price may experience significant declines, as seen in the market corrections of 2014, 2018, and 2022
Why are Bitcoins limited to 21 million?
Anyone would wonder why the founder of BTC (Satoshi Nakamoto) thought that it was a good idea to limit the bitcoin supply.
The logic behind his, her or their decision was to create a supply and demand balance that is automatically adjustable. This concept has proved to be in strong opposition to the mode used by the traditional banking system.
One major setback with the traditional banking system is their ability to curb the supply – hence controlling inflation and people’s purchase power.
Scarcity vs. Demand
While the finite nature of Bitcoin’s supply contributes to its scarcity, it is important to note that scarcity alone does not determine value. Scarcity becomes meaningful when there is a demand for the asset. Bitcoin’s value is derived from the interplay between its limited supply and the demand from investors, users, and institutions.
Frequently Asked Questions
It is not impossible to create more Bitcoin beyond the 21 million limit that is dictated in the Bitcoin code. After the maximum number of bitcoins is reached, which may be slightly below 21 million, no new bitcoins will be issued. Bitcoin transactions will continue to be processed and miners will still be rewarded. However, instead of receiving new bitcoins, miners will likely be rewarded with transaction processing fees. While the supply of Bitcoin may not increase beyond 21 million, the network will still function and transactions will continue to be validated.
The Bitcoin blockchain is designed to release a certain number of Bitcoins through the process of halving. After every four years, the amount of BTC being rewarded is halved through a process known as Bitcoin halving. The reward process as a result of mining is designed to decrease or reduce after every 210,000 mined blocks. Considering the fact that the combined time of solving is approximately 10 minutes, it takes about 4 years to get to the next halving point. As per the above calculations, the reward is divided into two until it reaches a point where there is nothing to reward for BTC. That means the halving process will end almost 120 years from now – the year 2140. At this time the nodes are expected to have mined the entire 21 million bitcoins which is the maximum supply.
The maximum supply of Bitcoin is hardcoded into its code and requires a consensus among the network participants to change. As of now, there are no plans to change the maximum supply of Bitcoin.
If someone loses their bitcoins by losing access to their wallet or private keys, those bitcoins become permanently inaccessible. However, the total supply of bitcoins remains unaffected. The lost bitcoins remain in the blockchain, but they are effectively out of circulation.
The limited supply of Bitcoin does not necessarily hinder its usability as a currency. Bitcoin is divisible up to eight decimal places, allowing for microtransactions. Even if the price of one bitcoin were to increase significantly, smaller units, such as millibitcoins or satoshis, can be used for everyday transactions.