With over 80% of Bitcoin already mined, the increased scarcity is likely to lead to the appreciation of the currency.
The 17 millionth Bitcoin was mined last month
There is, of course, a finite supply of Bitcoin; last month a milestone was reached as the 17 millionth Bitcoin was mined. There are only 21 million Bitcoins to be mined in total.
Despite the fact that it has taken just nine years to mine 17 million Bitcoin in the market, it is estimated that the remaining currency will not be all be mined for over a century. The exact year being suggested is 2140.
This is due to the algorithms solved in the mining process becoming more difficult, and the reward for Bitcoin miners also decreasing. The initial reward for each block mined started at BTC 50 but was scheduled by founder Satoshi Nakamoto to halve every 210,00 blocks mined.
Currently, miners are rewarded with BTC 12.5 per block, with this expected to halve in the next two years. As Bitcoin users and miners can track approximately when this halving is supposed to occur, it is thought that this does not significantly decrease the valuation of Bitcoin.
In order to sustain the network once Bitcoin mining eventually becomes nearly unprofitable, transaction fees paid by network users will be used to subsidize their activities. As more users enter the network and more Bitcoin is actively traded, this will help make up for the decreasing block reward.
Benefits of scarcity
As scarcity will make it more difficult and expensive to obtain Bitcoin, this both encourages holders to retain their assets and new users to enter the market sooner rather than later, driving the demand higher.
Essentially, as with any asset, it is a matter of ‘utility + scarcity = value’. A whole host of factors are encouraging new investors into the market, one example being Japan legally recognizing Bitcoin as tender last year.
The popularity of Bitcoin with the younger generations is spurring the widespread adoption of the currency. A recent survey polling millennials found that 27% would choose Bitcoin over traditional stocks.
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