There are 21 million bitcoins in total, but not all of them have been mined. In other words, not all 21 million bitcoins — also known as the total supply — have been created yet. At the time of writing, there were around 19.5 million bitcoins in circulation — this is called the circulating supply.
This cap on total supply is a fundamental feature of the Bitcoin protocol designed to create scarcity and prevent inflation.
Scarcity: By limiting the total supply of bitcoins to 21 million, it creates scarcity, which some compare to the scarcity of precious metals like gold. Scarcity is a key factor that can contribute to the store-of-value properties of an asset. The idea that some proponents of Bitcoin put forward is that, as Bitcoin becomes scarcer due to halving events (which reduce the rate of new bitcoin issuance), it may become more valuable over time, assuming demand continues to grow.
Inflation Control: Traditional fiat currencies, like the US dollar, can be subject to inflation, as central banks can print more money, potentially leading to a decrease in purchasing power. Bitcoin’s capped supply ensures there will only ever be a maximum of 21 million bitcoins in existence. This predictability and limited supply are intended to hedge against inflation and currency devaluation.
How Are New Bitcoins Created?
The process of issuing new bitcoins is called ‘mining’. Miners solve complex mathematical problems to validate transactions and add them to the blockchain. In return for their efforts, they receive newly created bitcoins as a block reward. However, this reward is halved approximately every four years in an event known as ‘halving’.
The halving events will continue until the maximum supply of 21 million bitcoins is reached, which is estimated to occur around the year 2140. After that point, no new bitcoins will be created, and miners will rely solely on transaction fees for their rewards.
There are approximately 1.5 million bitcoins left to be mined (at the time of writing) out of the total capped supply of 21 million.
The last bitcoin is expected to be mined around the year 2140. This estimate is based on the Bitcoin protocol’s design, which includes a controlled issuance schedule.
Bitcoin started with a block reward of 50 bitcoins per block when it was first mined in 2009. In other words, 50 bitcoins were issued per block.
Approximately every four years (or after every 210,000 blocks), the block reward is halved. The first halving occurred in 2012, reducing the reward to 25 bitcoins per block.
The second halving occurred in 2016, reducing the reward to 12.5 bitcoins per block.
The third halving occurred in 2020, reducing the reward to 6.25 bitcoins per block.
The next halving is expected to occur in 2024.
Halving events will continue until the maximum supply of 21 million bitcoins is reached.
Based on this halving schedule, miners will continue to receive smaller and smaller block rewards until the reward reaches zero, expected to be around the year 2140. At that point, no new bitcoins will be created through mining, and miners will be compensated solely with transaction fees for securing the network.
How Many Bitcoins Have Been Lost?
It’s difficult to determine an exact number for the amount of bitcoins that have been lost because Bitcoin transactions are pseudonymous; there is no central authority tracking ownership or lost coins.
However, it’s well known that some bitcoins have been lost over the years due to various reasons, including:
Lost Private Keys: Many early Bitcoin adopters may have lost access to their bitcoins because they lost their private keys or the hardware upon which the keys were stored.
Unrecoverable Wallets: Some may have lost bitcoins by sending them to wallets they no longer have access to or with known vulnerabilities.
Forgotten Wallets: Bitcoin wallets were not as user-friendly in the early days, and some individuals may have forgotten about wallets they created or the bitcoins they stored in them.
Deceased Owners: In some cases, Bitcoin owners have passed away without sharing their private keys or recovery information, resulting in those bitcoins becoming inaccessible.
Burnt Coins: Some bitcoins have been intentionally ‘burnt’ by sending them to addresses with no known private key, making them permanently unspendable.
While it’s challenging to quantify the exact number of lost bitcoins, various estimates suggest that a significant portion of the total supply may never be recovered or used again. These lost coins contribute to the overall scarcity of Bitcoin, as they are effectively removed from circulation, potentially impacting supply-and-demand dynamics.
Conclusion
With a capped total supply of 21 million bitcoins and a controlled issuance schedule defined by halving events, Bitcoin distinguishes itself from traditional fiat currencies. This scarcity not only underpins the value proposition of Bitcoin, it also provides it with a potential hedge against inflation.
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How Many Bitcoins Are There in Total? | Crypto.com
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