Bitcoin: more scarce than we thought

crypto.inferno (67)in #bitcoin • 6 years ago (edited)

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Bitcoin’s maximum supply is 21 million, of which 17.3 million BTC (82%) has already been mined. Millions of BTC have also been lost over the years, and a new report suggests the actual available supply may be far lower than previously believed.

One of the things that has proven so attractive about bitcoin is its limited supply. In a world of ever-inflating fiat money, digital gold has – like its shiny metal analogue – something special going for it. But it turns out that supply may be even more limited than we thought.

We always knew that early adopters who tinkered with the currency have lost a lot of bitcoin – back when it wasn’t worth anything, lots of people mined it and deleted their wallets or threw away their old computers. And, of course, there’s a big question mark over the million-or-so coins that Satoshi himself mined.

The report, by blockchain research companies Chainalysis and Diar, around 36% of all coins are either lost or as yet unmined. That’s a total of some 7.5 million BTC.

For the discerning hodler who appreciates scarcity, it gets better still. A further 30% (6.4 million BTC) can be considered long-term investment – coins that aren’t going to be panic dumped. Around 22% are held by speculators. Interestingly, these figures have held steady between May and August, playing into the market consolidation narrative. As might be expected, the price crash at the beginning of the year coincided with long-term investors selling large amounts of coins in a huge redistribution event. A repeat of that does not appear to be on the cards.

One last item of note: spending on research with firms like Chainalysis has tripled, and an increasing amount of that is coming from law enforcement for KYC and AML purposes. Be warned!