Key Takeaways:
- 90% of Total Bitcoin Mined has been mined, according to data from the Clark Moody Bitcoin Dashboard.
- As the financial network grows, fueling the increased demand for BTC, a sudden and severe supply shock may become unavoidable.
When people, institutions, and governments realize how scarce Bitcoin is, they will experience a whole new level of FOMO.
The Bitcoin network, the only form of digital cash that solves the double-spending problem in a properly distributed and trustless manner, enforces a supply cap of 21 million coins via its consensus protocol, is run by tens of thousands of nodes around the world.
One of the key features that make Bitcoin appealing is its predictable and unchanging monetary policy, especially in light of the reality of fiat and “crypto” currencies. The supply and monetary policy can change based on the decisions of a select few people.
In contrast to soft fiat money, peer-to-peer (P2P) electronic money is sound. Nobody can increase the supply of bitcoin in the same way that no one can decrease it. The Bitcoin network is governed by “rules without rulers.”
Although “we are still early” has become a meme, it is most likely correct. Only a tiny percentage of the population is aware of Bitcoin and its potential to empower ordinary people. People who live in privileged areas may disparage Bitcoin, yet the peer-to-peer cash system can empower them.
For the most part, Bitcoin means different things to different people. For example, it might serve as a store of value for someone residing in the United States or the United Kingdom, where inflation isn’t as high but still erodes purchasing power over time. For someone living in Palestine or Cuba, on the other hand, where violence and authoritarianism are frequent, Bitcoin may be their last hope of financial freedom.
Bitcoin’s diverse use worldwide highlights its adaptability and the numerous ways it can help different individuals in various ways. Yet, most individuals are unaware of how Bitcoin can help them.
The predictable issuance of new bitcoin continues to be triggered every ten minutes on average when another block is mined, regardless of people’s comprehension of the monetary network.
The scarcity of BTC is more apparent now that more than 90% of the Bitcoin supply has been issued. Although already-issued coins can and often are traded on the market, the truth is that companies hold the majority of the circulating bitcoin supply with little or no history of selling.
Glassnode, a data analytics firm, published research in December 2020 that attempted to evaluate and provide some light on the liquidity of the Bitcoin supply. It looked at “Bitcoin entities” and divided them into three categories based on their liquidity: extremely liquid, liquid, and illiquid.
“Our analysis shows that illiquid entities presently own 14.5 million BTC (78 percent of the circulating Bitcoin supply),” according to the report.
Even though issued bitcoin can be traded on the market, most of it is owned by persons who have no plans to sell it. The “HODL” concept is popular in the Bitcoin community, and many people are committed to holding on to their BTC until hyperbitcoinization — when Bitcoin reaches full monetization and becomes a unit of account, and they will be able to spend rather than sell.
However, much of the yet-to-be-issued stock is also not very liquid. Some of the world’s largest public bitcoin miners have joined the HODL bandwagon this year. For example, hut 8, a Canadian miner, took ownership of all 256 BTC mined in November. As of November 30, 2021, it had 5,242 bitcoin in reserve.
When people, institutions, and governments realize how rare Bitcoin is, they will experience a whole new level of FOMO (fear of missing out). Because there isn’t enough supply to meet a significant increase in demand from huge players like hedge funds and central banks, a supply shock may be unavoidable, resulting in soaring prices and the eventual collapse of the US currency.
