The upcoming bitcoin halving has got everyone talking and gushing about it. Crypto communities, spread across the different social media networks are already ripe with discussions on the impact of bitcoin halving cryptocurrency markets and more importantly, the price of bitcoin.
What is the significance of bitcoin halving? How many bitcoin are there in circulation today? What happened to all those bitcoins? And what happens to the number of bitcoins after the process of bitcoin halving? Read this in-depth analysis guide to get your answers to these questions.
The Finite Supply of Bitcoin and Its Significance
Decades before, our entire monetary system was backed by gold. In other words, a country’s currency or the paper money was directly linked to the value of gold. Now since gold is difficult to mine and harder to find, the supply of the precious metal is limited. In turn, the governments cannot print money whenever they wish to because of the scarcity of gold.
Globalization and the growth of economies demanded a substitutional system, one that is not bound by scarcity. Hence, a new system of fiat money gained prominence in the late 20th century. The fiat money is a government-issued currency, which is not backed by gold, but rather it is backed by the government that issued it. Moreover, it has an infinite supply.
While it gives governments greater control over their economies, it also risks losing its complete value in cases like hyperinflation. Currently, countries like Venezuela and Zimbabwe are going through an economic crisis with the value of fiat currencies depleted. The economic crisis of 2008, was one of the devastating proof of our fiat currency.
The digital currency, bitcoin which made its entrance amidst the financial crisis clearly proved the point. It is decentralized- the central government or the banks do not have a say on the working of bitcoin, unlike our fiat money. The entire network works on a peer to peer platform such that it does not need banks or other financial organizations to process transactions. Moreover, it has a limited supply of 21 million. Once it is exhausted, no new bitcoins can ever be mined. The finite supply of bitcoin ensures that a condition like hyperinflation can never be induced.
Moreover, the mainstream adoption of bitcoin is growing. Besides, an upcoming halving will further give bitcoin a boost in terms of value as well as significance. Monfex, a CFD broker, which allows leveraged trading in bitcoin, has performed a fundamental analysis of the reasons for the bright future for bitcoin.
Bitcoin came in 2008. Since it has a limited supply of 21 million, how many bitcoins are there in circulation today?
Bitcoins in Circulation
Currently, there are about 18 million bitcoins in circulation. To be fairly precise, at the moment of writing- 18,071,637 number of bitcoins in circulation.
The entire process of issuance of new bitcoin is based on mathematical algorithms. The bitcoin network issues a new bitcoin block every 10 minutes.
The issuance of new bitcoins is done through a process known as mining. The role of miners is to verify transactions of the bitcoin network. The beauty of the bitcoin network is that it is beautifully intricated and incentivized so as to prevent any fraudulent activities from happening. In order for miners to find new bitcoins, they need to verify if the transactions are legit, thereby keeping the network and its participants honest.
Every 10 minutes, one miner receives the block of bitcoin as ‘reward’.
This reward contains a specific number of bitcoins inside it. In 2008, the reward comprised of 50 bitcoins. Every 4 years, the reward gets reduced to half. In other words, the number of bitcoins received in 2012, 4 years later, was 25 per block. In 2016, this reward further halved and was reduced to 12.5 per block. Now, in 2020, the phenomenon of bitcoin halving will further reduce it down to 6.25 bitcoins per block.
The last bitcoin that will ever be created will be in 2140.
What Happened to the Number of Bitcoins in Circulation?
So if we are left with 3 million bitcoins left to be mined, does it mean that currently, the number of bitcoins in circulation is 18 million?
The importance and value of bitcoin have gained significance in the last few years. However, in the initial years, people didn’t recognize the usefulness as a currency. There have been number of cases where people have thrown their hard drives containing the private keys to bitcoin. The thrown hard drive is now worth millions of dollars.
Alternatively, to access bitcoin you need to either remember or store your private keys. There have been instances of people who have either forgot where they stored it, sold their computers on which they kept, or have simply overlooked.
A new study predicts that almost 3.79 million bitcoins, currently worth billions of dollars, are lost forever with no way to retrieve.
While bitcoin is gaining adoption, people are yet unfamiliar with the ways to secure bitcoin. The result- the cryptocurrency remains vulnerable to hacking threats.
The popularity of bitcoins was even noticed by cybercriminals. More than 1 million bitcoins are stolen either from exchanges or personal wallets. In just one scandal of an exchange firm, Mt Gox, almost 850,000 bitcoins were stolen by the hackers.
A hack on an exchange called Bitfinex resulted in the theft of almost 150,000 bitcoins. Other than that, a fraction of bitcoins has been stolen in other small heists.
Small Tip- Before you begin trading in bitcoin, you should always understand the options of the wallets, in which you can store your bitcoins. You can refer to this guide on the Monfex to get a clearer understanding of hot and cold wallets.
A handful of people have recognized the significance of bitcoin, in its early stages. According to an analysis, only 1600 people, also known as whale investors, possess almost 5 million bitcoins.
One of them, includes Satoshi Nakamoto, the founder of bitcoin. He is estimated to have nearly 1 million bitcoins in his wallet. You can further refer to this article on Monfex, for further information on Satoshi Nakamoto.
Out of 21 million bitcoins, 3 million are left to be mined. Around 4 million are lost. Whale investors have 5 million in their possession. Further, 1 million of them are stolen, although they are not much used for circulation. This leaves us with 8 million, the number of bitcoin in circulation in 2019.
Best Ways to Buy Bitcoins in 2019
With the rising prominence, the surrounding infrastructure and methods for owning bitcoin have also grown.
Bitcoin mining has turned into a full-fledged business with cloud mining, pool mining and mining rigs. However, with the increase in competition, the level of mining has subsequently increased. Furthermore, over the years, bitcoin rewards have also been reduced to half. Therefore, bitcoin mining is not as profitable as it used to be.
Another means of purchasing bitcoin is through a popular cryptocurrency exchange. After purchase, you can either use it to ‘hodl’ it and wait for the price to increase. You can trade your bitcoins in exchange for other coins like Dash or Litecoin. However, you must always transfer your bitcoins from your exchange to your hardware wallet. This prevents your bitcoins from getting stolen, in case of a hack on the exchange.
Alternative methods of leveraged trading have also evolved for cryptocurrencies. Like the stock market, it allows you to indulge in trading a higher bracket than what you have put in. Monfex, a CFD broker, allows you to trade cryptocurrencies among other financial instruments. On this trading exchange, you can even leverage 50 times more bitcoins than you have put in.
As a cryptocurrency, bitcoin has far exceeded its predecessors. The value of bitcoin in terms of merchant payment methods, its significance as a currency, and its worth as an investment is steadily rising. Through our guide, we have given you a brief overview of how many bitcoins are there in circulation, the significance of its finite supply, and what the upcoming bitcoin halving means for the cryptocurrency market.
What does its future entail? How will the upcoming bitcoin halving impact its prices? Well, time can give a more absolute answer to these questions.