In early 2018, almost everyone has at least heard of Bitcoin. However, few people fully understand its features and how it works.
One of Bitcoin’s defining features is its supply, or how many Bitcoin there are in existence.
How Many Bitcoin Are There?
Since 2009 when Bitcoin was created, about 16,971,462 Bitcoin have been released (as of April 11, 2018, ~12pm EST). This 16.97 million number is known as the Bitcoin circulating supply.
Bitcoin is released as Bitcoin is mined. Mining is the process by which Bitcoin transactions are confirmed. The people who do this are called “miners”.
When Bitcoin transactions are initiated, they are sent to the Bitcoin network to be put into blocks, which consist of numerous transactions.
For a block to be added to the blockchain, or series of Bitcoin blocks that act as the record book for all Bitcoin transactions ever, its nonce has to be found.
A nonce is a string of random numbers that, when found, allows a new block to be added to the block before it.
Miners compete with each other to find this nonce first. Whoever finds the nonce adds the new block to the blockchain and is rewarded with newly minted Bitcoin for his or her efforts.
The newly minted Bitcoin is also said to have been “mined”. The term “mining” comes from the fact that Bitcoin mining isn’t easy and like real-world miners, Bitcoin miners are trying to procure something valuable – Bitcoin.
So far, 16,971,462 Bitcoin have been mined. It’s estimated that all Bitcoin will have been mined by around the year 2140.
How Many Bitcoin Will Ever Exist?
Bitcoin’s max supply is fixed at 21 million Bitcoin. 21 million is the maximum amount of Bitcoin that will ever exist.
The Significance of Bitcoin’s Supply: Scarcity
The fact that Bitcoin’s max supply is fixed is very significant. Unlike fiat currencies, or government-issued currencies like the United States dollar, which are printed at will by government authorities, the current and future supply of Bitcoin are known.
Fiat currencies like the dollar are more or less printed at will, which can lead to dollar inflation and devaluation.
Such mass production of the dollar means that a dollar you own today will be worth less in the future, which is why people will invest in things like stocks to try and beat inflation.
On the other hand, since Bitcoin’s supply is fixed, Bitcoin is considered a “scarce” asset like gold. Like gold, there is not a lot of Bitcoin in the world.
If people continue to think that Bitcoin is valuable, the price of a single Bitcoin will only increase further as more and more people try to get their hands on some of the remaining Bitcoin.
What Happens When All Bitcoin Are Mined?
With about 4 million Bitcoin left to be mined, some wonder what will happen when no more new Bitcoin are issued. There are a couple of hypotheses that people have.
No More Mining Incentive
If all Bitcoin is mined, that means that mining to find the correct nonce and be rewarded with new Bitcoin will cease to exist. Some believe that miners will then have no more desire to mine Bitcoin, which could lead to centralization as less people store copies of the Bitcoin blockchain and help secure the network by validating transactions.
Miners Will Still Collect Transaction Fees
Others think that miners will continue to mine, as they will still be paid in transaction fees. Spenders of Bitcoin pay transaction fees so that miners have more incentive to include their transaction in a block (transactions with higher transaction fees are usually prioritized by miners since the miners are getting paid more).
Bitcoin Price Increases Regardless
Regardless of what happens to mining, most believe that when all Bitcoin are mined, the price of Bitcoin will only continue to increase further because of the aforementioned scarcity.
If people continue to see Bitcoin as a valuable asset the same way that they see gold as a valuable asset, people will try their best to get their hands on one of the 21 million Bitcoin. This demand will drive up price, as supply will be limited.
As of April 11, 2018, there are about 16.9 million Bitcoin. At a max supply of 21 million Bitcoin, that means there are only about 4 million Bitcoin left to be mined or released for use.
This means that Bitcoin is a scarce asset and if people continue to see Bitcoin as valuable, its value will only continue to go up.