Most people understand that bitcoin tokens are a finite resource, but many fail to take into account other factors impacting the token’s scarcity and resulting value.
Bitcoin’s dependance on an owner’s individual security practices exposes tokens to the risk of human error. Although tokens are being mined at a consistent rate, the more bitcoin that is introduced into the ecosystem, the greater the potential for bitcoin to be permanently removed from circulation — let’s say due to someone losing the password to their wallet. To truly understand this phenomenon’s full impact, traders need to understand the following:
- How many bitcoins actually exist?
- How much bitcoin will be produced in the future?
- How much of bitcoin’s volume is currently in circulation?
- How many bitcoins have been lost and will never be recovered?
Let’s understand the current landscape.
How many bitcoins have been mined?
When bitcoin was first created, its blockchain protocol allowed for a maximum of 21 million BTC. Miners have yet to reach this block limit, but they are getting close. There are over three million tokens remaining, which are mined on an average of 1,800 per day. New blocks are created every ten minutes, each containing 12.5 BTC.
At the time of writing, one bitcoin is worth approximately $11,704.5 USD (on date of publishing — 08/06/2019). This represents a multi-million percent increase from BTC’s 2010 value. If we were to assign this value to the entire blockchain, all 21 million tokens would cost $181.6 billion. However, BTC value will continue to fluctuate over time, partly thanks to lost bitcoin assets.
How does lost bitcoin impact its total value?
While bitcoin is digital, we cannot assume its total volume is liquid or even accessible. Any BTC owners who lose access to their BTC keys or forget their wallet passwords cannot access their tokens. As of writing, an estimated 4 million BTC has been irretrievably lost.
What’s more, approximately 50% of BTC has not made any recent movement within the blockchain, which includes lost tokens. This could mean the number of lost tokens is higher — or will become much higher — than initially estimated.
This is actually good news for existing bitcoin holders. Once the blockchain reaches 21 million BTC, no further blocks will be produced. Bitcoin will become a finite resource, and each lost token will increase the overall value of the remaining BTC. Existing owners can expect the value of their BTC to increase in relation to lost tokens — provided they aren’t among the forgetful customers who lost access in the first place.
How can you ensure your bitcoin maintains value?
Bitcoin holders can maximize their BTC value by securing tokens against theft while keeping them relatively accessible. Hot solutions grant online access to BTC, but increase the risk of theft or password loss. Cold solutions store BTC keys within offline servers, increasing security and lowering accessibility.
At OKCoin, we use a specialized cold wallet solution based on advanced security protocols to ensure BTC remains in your control. Our marketplace also offers the resources to help you obtain, trade, and manage BTC while fully complying with existing regulations. For more information, visit us today at OKCoin.com.
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Disclaimer: The material and information contained in this article is for general information purposes only, and no part of this article should be construed as professional financial or investment advice. Whilst we endeavor to keep the information up to date and correct, OKCoin makes no representations or warranties, express or implied, as to the completeness and accuracy of the information presented in this article. You should not rely upon the material or information in the article as a basis for making any business, legal or any other decisions.12