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How Many Bitcoins Are There and What Happens When All Are Mined?


There are many Bitcoins in circulation right now.

Given their huge popularity and investment potential, there is a growing demand for it.

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They have yielded 1600+ annual returns in 2017.

The valuation doubled in a matter of one month in December, 2017.

It is now seen as a convenient alternative to fiat currency.

If you see the December data, the cryptocurrency market saw a huge surge.

The total market capitalization surpassed $600 billion in December 2017.

This alone goes on to highlight the latent demand for this currency.

In fact, in many ways, Bitcoin is quite similar to gold.

You cannot create gold in a factory.

You have to dig deep and mine gold out.

Bitcoin too has to be mined, albeit digitally.

So just like in case of gold, there is only a finite supply of gold.

So if you are wondering how many Bitcoins are there?

There are 21 million Bitcoins that can be mined in all.

According to the situation now, that is the extent of Bitcoin supply.

Once miners have exhausted this supply, the planet’s supply will be totally sapped out.

Basically the Bitcoin creators again followed the gold example.

They believe a fixed supply of this cryptocurrency will keep world markets in control.

This is exactly why there is a ban on arbitrary creation of Bitcoin.

It helps maintain a specific level of sanity in the market.

There is no mindless rush for creating more of it.

Moreover, this is an extremely expensive business.

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Bitcoins- The Mining Dynamics

But as the popularity of Bitcoin rises, it is important to take stock of the current state.

Many companies and products are adopting Bitcoin as a form of payment.

So you can easily understand that the Bitcoin is spreading its wings pretty fast.

The most important fact is there is no Central Bank monitoring this currency.

In case of Fiat currency, there is a centralized control.

However, there is no such regulation for Bitcoins.

As a result, the Bitcoin operation is completely decentralized.

The creation of Bitcoin is based entirely on mathematical calculations.

So again, the similarity with gold comes in play when you assess how many Bitcoins are there.

You can only mine Bitcoin; you cannot print it like currency notes.

All the new Bitcoin that is in operation is based on the core mathematical formula.

By this, I am referring to the formula that Satoshi Nakamoto devised.

All the new software that is created is a derivation of this core formula.

These are recorded and verified at every single step on the Blockchain.

But the blockchain is just a record keeper.

It does not have the capability to create fresh Bitcoin.

But mining Bitcoin is far easier than mining gold.

The question then is how you can bring in a semblance of regulation here?

Well, this is where the Bitcoin protocol kicks in.

According to the Bitcoin protocol, only 21 million bitcoins can be created by a miner.

So there is a cap on the total number of bitcoins that can be created.

But this was not such a huge problem till 2011.

Till that time, Bitcoin was just another uncharted territories.

But as the popularity increased, cryptocurrency variants also kept getting added.

As a result, over 1000 cryptocurrencies were created and started circulation.

The Current Bitcoin Supply

As of October 2017, there are 16,654,762 bitcoins.

Now I am sure that you remember the bitcoin supply is capped at 21 million.

But that does not mean that the Bitcoin chain will remain static.

This is an extremely dynamic space.

There is some change that takes place every passing moment.

Supposing a really hard bitcoin fork takes place, the number can vary to a large extent.

The first outcome will be it will create a brand new set of dynamics.

It can even result in a completely new cryptocurrency.

Moreover, the bitcoin market is extremely volatile.

So if you are asked, how many bitcoins are there, it can be a difficult situation?

This is primarily because when you mention ‘how many’, you also need to specify when.

Some new development is practically taking place at every juncture.

This makes a realistic assessment rather complicated.

Supposing Exchange A says that x number of Bitcoin is traded, it provides a fragmented picture.

Whenever there is any mention of current figure, it barely refers to 24 hours.

Also, there is a huge difference between what is in circulation and how much is mined.

The number of bitcoin in circulation is normally the number available.

But whenever you consider bitcoin mining, it refers to how much is mined till date.

In this context, you also have to take into consideration individual behavior.

There are many users who can accumulate a huge number of Bitcoins but keep it static.

So the difference between these actively traded and static ones also have to be considered.

There are many bitcoin users who have static volume.

If too many users have the same policy, it can even create scarcity in the market.

Demand-Supply Dynamics

Now that brings us to another unique phenomenon in the Bitcoin space.

There are many different aspects of Bitcoin trade.

Perhaps this is why there cannot be a direct response to the total number of Bitcoins.

You have to consider several elements in this context.

A scarcity phenomenon is one of the biggest realities of the Bitcoin trade.

If there is even notional scarcity in the overall Bitcoin eco-system, prices can go up.

This is exactly why Bitcoin owners technically have to trade their coins as often as possible.

This regular trading helps in creating a reasonable Bitcoin momentum.

Often this momentum has a direct bearing on how many Bitcoins are there.

In this context, you also have to consider the number of lost bitcoins.

Let me illustrate this point with a small example.

Consider the case of Bitcoin exchange, Mt Gox in 2014.

The world’s largest Bitcoin exchange becomes offline in one masterstroke.

Along with that, 850,000 Bitcoins also get lost.

So when you are trying to assess how many are there, do you consider these?

Till date, at least 4 million Bitcoins are lost.

So when you are mining fresh ones, do these lost counters matter?

Another interesting aspect of this supply-demand matrix is the anonymous trade.

In fact, this is one reason that Bitcoin trade is often looked down upon

But at the same time, you cannot deny its existence.

The question is how you can consider this transaction in your total count?

Black marketers and drug sellers are often seen as misusing this route.

The anonymity and lack of control both act in favor of the eco-system.

But the question is how can you include this key factor in your calculation?

When you are calculating how many, this also matters.

Bitcoin Market Realities

Perhaps this is the reason that these questions are so pertinent.

The future is an extremely important consideration.

When you think about the future, there are some very pertinent issues.

The current market capitalization of Bitcoin market is over $300 billion.

But 40% of this trade belongs to the opaque segments of the economy.

So the dark unaccounted segments trade here actively.

The question is roughly 1000 users primarily control this unregulated market.

These people can coordinate their actions.

They can even preview this activity to a select list.

The question is how they can impact the overall trade if the mining limit is hit?

They have the capacity to make or break the market.

This is why the regulator’s role is extremely crucial.

But the reason why it is an area of concern is that of the tie lag.

Typically you will see regulations lagging behind technology.

Perhaps in this context, this is a very important factor.

How are we prepared to tackle the Bitcoin challenge in future?

The protocol caps Bitcoin creation at 21 million.

But is that the only way to mine for new Bitcoins?

The threat of a heightened price escalation and demand scarcity has to be weighed.

Volatility & Bitcoin Mining

The number of Bitcoins that are there is a very important consideration at the moment.

Almost every second person on the street considers buying Bitcoin is the best way to be rich.

But it is a very unstable asset class.

There are no clear rules or limits in place.

It is also extremely susceptible to the boom and the bust cycle.

In this situation, I am sure that traders are already factoring in extreme situations.

How will they take trade forward when suddenly the 21 million mark is reached?

The Bitcoin prices shot up to $1000 levels, and then the 2013 crash happened.

Prices at that juncture fell as low as $300.

Again the prices rallied back to $1000 level.

But that said there are any fence sitters at the moment.

They are waiting for the most appropriate moment.

At the same time, it is almost as important to know how many bitcoins are there.

The Current State of Affairs

Bitcoins are typically deflationary in nature.

The 21 million mark is not unattainable by Bitcoin miners.

But there is no way to calculate the exact amount that is there.

In fact, even at the current stage, the active Bitcoins are a lot less than mined limits.

This is primarily because of the lost and any forgotten wallets.

Some recent studies say as much as 25% of the bitcoins in circulation are lost.

That is a scary condition.

It means that the 21 million mined bitcoin limit is that easily achieved.

So the question that comes to play what exactly the timeline is?

When will that last Bitcoin be mined?

In this context, you will have to consider the ‘Bitcoin halving’ concept.

Almost every 4 years, the number of new bitcoins created and mined is cut to half.

This is primarily because of the new transaction blocks created.

Well, this is also an extension of the Bitcoin policy.

It is predictable and transparent and easily verifiable.

Currently, the Bitcoin market is about 3 years away from another cut.

The mining reward is likely to be reduced further in about 3 years.

Till date, you have over 33 reward eras.

In each of these, you have seen significant value depreciation.

Initially, the reward was close to 50 bitcoins.

This number has been reducing significantly to 25 and then 12.5.

The assumption is by 2020, it can be as low as 6.25 bitcoins.

So if we continue with that maths 2140 may be the last year for Bitcoin mining.

If the current trend of rewards continues at that juncture, you will not have any fresh offering.

The overall depreciation impact will also kick in.

This can then have a domino impact.

Effects on Bitcoin Miners

The biggest impact will be seen on Bitcoin miners.

These people are directly affected by the limit or the scarcity in Bitcoin supply.

So will these miners be forced to move away from their block rewards?

How will they sustain the overall chain when they hit the 21 million mark?

There are some who maintain that the miners may still remain afloat.

This is primarily on the basis of the transaction fees.

They will have to rely on that to keep their operation afloat.

But that is only one unique school of thought.

There are others who argue that miners may find the cost of maintaining operations too much.

One direct impact is possibly a drastic cut in a number of miners.

There are many miners who may find the entire operation unaffordable.

The worry is that this type of experience can spike up the negativity in the entire system.

This can result in the severe shortage of responsible and resourceful miners.

The argument for this contends on two basic factor.

The transaction fee amount and the future chances of Bitcoin forks.

Most importantly ways to be financially solvent is primary in this case.

Or is there a possibility that mining costs may offset transaction fees?

Well, all that is in the realms of possibilities with no clear outlook on the future.

It is also possible that mining chips become less expensive and more efficient.

This can be a very important piece of development.

It will reduce the monetary burden on miners to a large extent.

They may even adjust to a new eco-system lower threshold limits.

The lower initial cost may go a long extent in keeping miners afloat.

It will provide them with an impetus even when there is nothing new to be mined.

Bitcoin Pricing

If you are wondering how many Bitcoins are there?

Or if you are trying to peep into the future when every iota of Bitcoin is mined?

You cannot ignore one key element.

This is primarily the price of the Bitcoin.

You have to remember that this market is also driven by demand-supply dynamics.

The huge price swings in recent times have made you aware of the extent of the impact.

No one can really tell with precision about the future course of action.

Will Bitcoin prices continue to rise?

Well, your guess is good.

But at the same time, there is vault after vault of inactive bitcoin.

When there is no new Bitcoin to mine, will these become active?

Will users introduce it in circulation to tide over the mining stagnation?

Well, the largest supply of inactive Bitcoin is with the creator himself.

Satoshi Nakamoto has close to 1 million inactive bitcoin.

Till date, this is more as insurance to deal with demand spike.

The aim is to address global supply issues in future whenever it happens.

This is simply an example of how many million bitcoins are not accounted.

They are floating somewhere in the Cloud.

Conclusion

Therefore, the question remains what will happen when all bitcoins are mined.

If you calculate how many bitcoins are there, roughly 2140 is when you will reach that limit.

Ideally, transaction fees are likely to keep the bitcoin momentum intact.

Though there is no more creation of new Bitcoins, prices will not come crashing down.

There are many stabilizing factors.

The million coins stashed away by Nakamoto is another example of this key fact.

In fact, Bitcoin value may continue to remain high.

Trade and online transactions are based on actual supply.

They have very little correlation with the future amount.

The idea is Bitcoin fees may become the most lucrative bet.

Higher money supply may also keep the bitcoin boat afloat.

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