Bitcoin Forum

Bitcoin is the largest digital currency in existence today, both in terms of market capitalization and price. While a lot of people attribute Bitcoin’s value to different reasons, such as adoption and increased use, we can also agree that scarcity is one of the leading factors in Bitcoin’s value.

From the beginning, Satoshi Nakamoto, who is the creator of Bitcoin designed it in such a way that the product would be scarce. The reasons are deliberate, and over the years we have seen the effect of such reasons come into play.

Here is what Satoshi Nakamoto had to say with regards to making Bitcoin scarce:

"As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: boring grey in colour, not a good conductor of electricity, not particularly strong [..], not useful for any practical or ornamental purpose ... and one special, magical property: can be transported over a communications channel".

In the above quote, you will notice that the key properties of Nakamoto’s description is that the “metal” is scarce, and can be transported over a communications channel. Those are the two fundamental platforms on which Bitcoin’s value is built.

To achieve the goal of making Bitcoin scarce, two key elements were implemented in the Bitcoin protocol:

- There is a limited number of Bitcoins that will ever be produced

- There is a systematic reduction in the amount of new Bitcoins produced, known as a Bitcoin Halving.

Limited number of Bitcoins

There will only ever be 21 million Bitcoins created. This is an intrinsic part of the protocol on which the cryptocurrency runs. Therefore, even when all the Bitcoins have been mined, as more people find use cases for it, the demand will increase and we know what that means. Increasing demand for a limited commodity makes it scarce, which automatically results in an increase in value. This is a basic economic principle.

https://www.youtube.com/watch?v=AABkJ55Zz3A

Even while we have not yet mined all 21 million Bitcoins, what we have seen in the past decade is a reflection of this principle. The awareness of Bitcoin has grown over the years, especially in the later part of this past decade. More people have entered into the ecosystem and the demand for Bitcoin has increased. The result of this is quite obvious, as the value of the cryptocurrency has risen within this same period.

Apart from more people wanting a portion of the limited Bitcoins that are available, there are other factors that have led to increased scarcity. Wallets whose owners have lost their private keys, and even Bitcoin wallets whose owners have died, means that the number of Bitcoins have dropped. What does this imply? Increased scarcity. This explains how scarcity is one of the leading factors of Bitcoin’s value.

Bitcoin Halving

Again, if you are familiar with some of the important terms in the Bitcoin ecosystem, then Bitcoin halving would not be all that new to you. However, let’s dive into what Bitcoin halving really means.

Within the original Bitcoin protocol is a systematic method of introducing new Bitcoins into the network. This is the process that we call mining, where computer processors are used to solve difficult algorithmic problems. This process of finding solutions to the problems leads to the verification of transactions on the network. It is a competitive exercise for the computers involved, and the first to solve a problem is rewarded with new Bitcoins. This is what Bitcoin mining is all about.

https://twitter.com/BitcoINstagram/status/1186318289049444353


From the beginning, solving these problems, which equates to finding a block, attracts a reward of 50 BTC to the miner. In order to implement scarcity, Nakamoto designed that this reward will reduce with time. Hence, after every 4 years, the number of Bitcoins that are earned per block is halved. So far, there has been two Bitcoin halving events, leading to a block reward of 25 BTC, and now 12.5 BTC per block. The next Bitcoin halving event will happen in May 2020, and the block reward will reduce even further to 6.25 BTC per block.

Conclusion

You have to bear in mind that while the rate of Bitcoin supply is diminishing, more people are finding their ways into the Bitcoin ecosystem. There is no mystery behind it, but simple common-sense economics. This is why you may have noticed a lot of investors using platforms like Vertex.Market to stock up on their personal Bitcoin supply.

Many people who are purchasing Bitcoin lately are doing so in anticipation of an increase in value down the road, especially with another Bitcoin halving event just around the corner. Especially coupled with the fact that the cryptocurrency is assuming the role of digital gold even more with its scalability issues.

Scarcity is one of the leading factors of Bitcoin’s value and it is an idea that was deliberately implemented from the beginning. Many key players in the industry are already making predictions about the future value of Bitcoin, having considered the effect of the scarcity along the way. In November 2018, ex-hedge funds manager, Mike Novogratz predicted that Bitcoin will recover and return to the $20,000 highs of late 2017.

https://medium.com/@official_83664/scarcity-is-one-of-the-leading-factors-of-bitcoins-value-d0e149d74151

21 million cap in my opinion is not about scarcity and price but instead it is more about having a clear maximum supply and a clear predefined plan for distribution of that supply. this design was specifically chosen to fix the problem with fiat system where there is absolutely no cap and no predefined plan of supply creation. the government can print as much money as they like and that causes inflation among a lot of other economical issues.

as a side product of that, we get the scarcity and with a limited supply and an increasing demand we get the rising price. of course it should not be forgotten that the demand is an important part of that rise otherwise we have altcoins with much smaller supply that are not only worth less than bitcoin but they are losing value as time goes by even though they are supposedly scarce too.

Of course! Bitcoin's limited supply was designed to influence adopters perception since from the beginning of its inception - that it is bound to be very rare according to an estimated predefined time frame.

An analogy for this is that we could liken Bitcoin's supply to very rare mineral like Diamond - assuming it has also a limited supply of 21 kilos and knowing that it will reach its max supply in due time, then most of us would likely expect its price will go up due to its rarity and would do our best just to get a little bit of it!

Now this assumption would all be realized as long as there is great demand for it, because without demand, its price will eventually fall.

Here are related discussions which I think are relevant to the OP:

Stock To Flow Model: Modeling Bitcoin's Value with Scarcity (https://bitcointalk.org/index.php?topic=5191012.msg52690215#msg52690215)
wrote a paper about the convergence of bitcoin toward the stock-to-flow model (https://bitcointalk.org/index.php?topic=5198577.msg52980119#msg52980119)

Exactly mate, this is the point of BTC. The scarcity was one of the main reasons why it was seen as so popular, and a better payment option then some fiat currencies, a lot of people dislike inflation and if you are just not able to print more money, that entire factor is reduced and becomes impossible.

21 million market is perfect, this combined with the constant halving means that we will never need to worry about prices being an issue, or even running out of BTC for 30 or so years to come.

Are you trying to say that 21 million bitcoins are a lot?

I disagree with that. There are today near 8 billion people in the world

So, if we make the math, there is 0.002625 Bitcoin for each living person.
However, world population keep growing at exponential rate. Soon it will be less than 0.002 for each

Look at this wikipedia image
https://upload.wikimedia.org/wikipedia/commons/thumb/4/48/World_population_v3.svg/580px-World_population_v3.svg.png https://en.m.wikipedia.org/wiki/World_population

It is indeed a factor. The impression that it sends to people is that it is not unlimited and that after years and decades the total supply will remain the same. This is in great contrast to fiat which is unlimited and even created or printed out of reasons that are either hidden or beyond the comprehension of the majority of the common folks.

In addition to the limited total supply of Bitcoin is the fact that a significant chunk of it is already lost or forgotten beyond recovery, and that the mining reward is also reduced into half every four years. Scarcity is obviously playing a vital role in the rise of Bitcoin's price value.

market law is inseparable from supply and demand, the most important of all is demand, while scarcity cannot guarantee demand will increase, we don't know in the future whether bitcoin remains number one crypto, it could be people will leave bitcoin and switch to another crypto.

21 million is not a perfect supply for me because not all coins are accounted for there are unused coins like those on Nakamoto's wallet and those lost from carelessness and lost private keys and you are right our population is growing and many countries are now started adopting Bitcoin, but supply is indeed the leading factor, more adoption od less supply means higher price.

Bitcoin is simply said a scarce asset with functionalities that would meet the "specifications" of a global mainstream currency. I always like to give this example to people: recent statistics show that there are over 36 million millionaires in the world which means that Bitcoin should be worth more than $1,710,000/unit just through the law of supply and demand( taking into account that each of these millionaires only want to buy 1 BTC). In this calculation aren't included the considered lost BTCs ~4M.

I dont think he was implying that, but great point on your end. One to three BTC is going to be life changing in a decade.

In the field of economy, bitcoin probably is the first coin that would have a limit cap. So, it would be a first time experience where the value would head while we approach the limit.
With zero generation, there could be a drastic decrease in circulation of coin. Miners would need to wait for transactions to get the fee reward while the number of transactions would go scarce. Depending on the situation, I believe bitcoin should implement something more to make the blockchain dynamic.

things people are missing
analogy
people think there could only be 21million fruit oranges meaning only 21million people will get to taste what a fruit tastes like and be able to own the fruit for life

however oranges can be peeled way into smaller segments and have 210 million people have a taste of orange. infact oranges can then be cut up further and 2.1trillion people can know what a orang tastes like

this dos not mean that each 'piece' a person gets multiplies by 100,000,000. but instead they get 100,000,000 smaller a piece

thus its not scarce because there are more pieces than people. everyone can have a bit. no one can say there will never be enough pieces for everyone.

its not like a physical coin that only minted 100000 coins. coz with physical coins there can and only ever be 100000 owners of a coin.

markets do not change in relation to scarcity (21m) as that 21m number has been a factor for 10 years and has never changed and yet in 2009 when only 2mill were available the price was low. and now with 18m available the price is high.. which is an obvious counter indicator to scarcity

however the 'availability' (supply/demand) of just the custodian hoards of exchanges (1.2m right now of coins on exchanges) affect the price more
aswell as the decision to buy or to mine depending on the cost to mine 1btc vs the price to buy 1btc sways people to do one or the other to a varying degree.

scarcity of 21m is not a point again for emphasis 21m has ben a fixed number all along
its population demand for it (adoption desire) and market availability(market custodial hoards 1.2m NOT the 18m circulation)

Scarcity is not the sole reason why the price is increasing, the fundamental reason for the price of bitcoin increases is because there are people intrigued by the technology and they foresee a massive adoption in bitcoin and so is the reason people are investing in bitcoin and thereby the price keeps increasing, so what i am trying to tell is that scarcity is one factor for the increase in price and there are many other factors for the rise.

Edit: franky1 explained it better than me.

Scarcity, as a leading factor might be right but not totally because for anything to even have value, it needs to be scarce. On the otherhand, for anything to be said to be scarce, it means its not available but for bitcoin, the moment you have your fiat or any crypto, its available for you. All over the world, there are exchange sites, and peer to peer sites where people trade in millions by the minute which means its not scarce rather its the forces of demand and supply that push the price up. Also again, is the holding nature of people who believes that holding it means that the value in relation to fiat would increase that is not the case, that would mean making it an investment asset because its like someone keeping dollars under his pillow and thinking with that, the value would increase.

Yes if smallest unit of bitcoin is one bitcoin but that not really true since 1 bitcoin can be further divided into 100,000,000 sats so what if we convert 21,000,000 bitcoins into sats then it will be 2,100,000,000,000,000 sats which is more than enough even if everyone using bitcoin as their only currency for every payment they make so less number of bitcoin units is not the only reason for price to be hiked.

1. imagine there were 2100 coins(could be split) only 2100 could own it. but if 4200 want it. a bidding war would occur raising the price EG if coins were $1 each people would refuse to sell for less than double($2)


2. imagine there were 2100 coins(could be split in 2) where 4200 could own it. if 4200 want it. they can al have a piece and the bids wont be as high. instead if 2100 coins were $1 each people would refuse to sell for less than$1 a coin but could be swayed to sell a half coin for $0.60-$1 =whole coin $1.20-$2

in example one price would exceed $2. where as example 2 shows price only at extreme may reach $2

..
3. able to split into 10 pieces
ven less chance of $2 per whole coin. and more chance of ~$1.20 a whole coin

....
4. if there were 2,100,000,000,000,000 units. and someone buggd the code an 'destroyed' it down to just 2100 nits. demand would rise
5. if core devs STUPIDLY!! implemented 'millisats' (1000x unit supply(btc with 12 decimals)) demand would fall

Indeed, but as the title mentioned, 21 million still a factor that affects bitcoin price although it's not so significant these days.
Bitcoin surely will recover to $20,000 after the halving, but it's because the mining rewards decrease but should be able to cover the mining costs, so the real price of bitcoin measured based on mining costs. What makes the price rise to the moon is because the market trends i.e. manipulation, not the technology.

It is true mainly because limited supply with constant increase in demand would drive the prices up, but not really that it won't stop. After limit has been reached, people would still continue to buy and sell BTC in exchanges, maintaining balance in market trend. However, the real problem of Bitcoin is that nothing backs it up, and I don't think Satoshi meant it to be an asset, but rather a way of payment/transfer of funds without intermediary. There are complications on having a deflationary currency, and one of which is that people would just tend to hold their highly valuable BTC instead of spending it, making the market activity so low that no one actually uses it.

True.  Bitcoin isn't scarce if you consider how many decimal places a single bitcoin can be divided into.  The whole point of limiting the total number of coins was to ensure that bitcoin, a form of money, could not be inflated infinitely like fiat can be.  Satoshi no doubt saw the problem with hyperinflation situations and gov'ts printing money like they were manufacturing Monopoly games.  And that is the beauty of bitcoin.  One of the beauties anyway, because there are other attributes that make it an incredible currency.

But op, I agree that it is this 'scarcity' that is responsible for bitcoin's overall rise since its inception.  Look at a coin like doge, which has inflation built into its code.  That is probably the reason why it can't ever seem to stay much higher than 20-something sats.  There are just too many coins circulating and it's never going to get any better. 

I absolutely agree with you, as soon as the last bitcoin is mined, the price will grow many times.

Actually, for me, bitcoin being limited letting me think that once there are many people accumulated it. It's the market price will boost way up high as the demand for it increases too much. Though, the next reason for this increase in market price is already stated,

here:

It is a clear fact to everyone that there are reasons to trust the market so investments have a huge chance of succeeding if we did not let this great opportunity pass. Thus, scarcity is actually is the main factor to consider bitcoin's market value in the future. Refer to this link for more information regarding bitcoin's volume: https://www.buybitcoinworldwide.com/how-many-bitcoins-are-there/

You explained it well @franky1 though I also agree with OP's statement, what I meant is that Bitcoin's scarcity has pushed people to be interested on this space which may lead to increase demand for Bitcoin and grow its value. You were right about "markets do not change in relation to scarcity" but we could say that this is just like a stepping stone to drive its demand.

We're going into that way somehow.
Now that scarcity isn't in the high level, we could expect that many people would try to get some part of Bitcoin and save to the last Bitcoin to be mined. We all know that it won't easily to reach that level, it possibly many years to come, maybe we are died already.
If we look into that scenario, we never expect that prices may still at below $10k, $20k , or $50k...It more than that to see. I don't know if people would still take the risk.

This is why many people like and trust bitcoin as a financial solution in the future. Because of bitcoin limited supply and halving
happens every 4 years. This is the reason bitcoin becomes scarcity, but with that the value is getting higher because the supply
is limited but the demand continues to increase. It is different from the continuous fiat work printed every year, making inflation
so great. So from many experts argue the scarcity leading factor of bitcoin value, whose ideas have been implemented from the
start. With so many bitcoins predict bitcoin will rise and return to the price of another $ 20,000.

in my opinion limiting the number of bitcoins to only 21 million coins is an effective way to make bitcoin value more expensive in the future. because the amount of bitcoin that is mined every year will be less. and also with this scarcity, bitcoin will never experience inflation. so bitcoin will become a valuable item. so I think this satoshi is the most genius person in this century because it can create bitcoin with all its advantages.

Wrong assumption. If someone bugged the code in whatever way that changes supply, demand would fall.


Wrong again. How can Core "implement"? Core makes makes the code, but who puts it into effect? Core?

It's true that when the supply is limited then the demand for any product will increase for sure. so that Bitcoin is getting a demandable factor in these days, I think not only the scarcity but also the profit-generating issue is another reason for increasing the demand for this Bitcoin these days, but Bitcoin helving may not bring always a good impact on this system because people are getting afraid sometimes about the Bitcoin helving, sometimes it makes us happy but most of the time people are really confused about the happening in terms of the price of Bitcoin. but if a regulation process would be set up in this system then this volatility might be reduced.

Scarcity has been a major price riser for most of the commodities around such as gold, silver but these were actually having some other qualities such as their lusture and their ability to be used as ornaments. They have been used as ornaments for more than 1000 years. Bitcoin actually on the other hand is nothing but a piece of code. It's utility is in processing payments swiftly around any corner of the world along with pretty much anonymity. Now if value of bitcoin is merely increased due to scarcity then it won't go much far. People have to adopt it as their currency and only then you can see certain increase in the value of bitcoin. Scarcity won't be a leading factor of Bitcoin Value for very long.

---

However, Even though I have the opinion I stated above. People have made proper analysis and thesis on how Price can be elastic due to scarcity and flow.
Fillipone here gave a very nice analysis on Bitcoin Stock to Flow: https://bitcointalk.org/index.php?topic=5191012.0 which was based on this Analysis by PlanB https://medium.com/@100trillionUSD/modeling-bitcoins-value-with-scarcity-91fa0fc03e25

https://miro.medium.com/max/2100/1*jOLs8eLLbY2yTfk93-a1-Q.png

If half of all BTC is lost than prices will be cut in half. If you hold 1 BTC you will be able to buy twice as much with it but no new money was created. basically the guy who lost it or died, gave everyone holding Bitcoin a tiny bit of his wealth. If he had 1 million dollars in BTC and dies without giving out his private keys, that 1 million dollars is divided among all holders of BTC as a percentage of total supply they own.

So the price of Bitcoin should rise as there are fewer of them. If the market value of all circulating Bitcoin is constant taking money out of circulation will raise the value of what is left, until the overall value of the market is the same. However, The only thing missing is the psychology. Right now the majority of the world's population believe gold has value and they trust that it will maintain it. each year more people realize that with Bitcoin but this is not going to happen overnight or even in a year or probably even a decade.

scarcity is indeed one of the leading factors of bitcoin value
but you do not see people queing to buy some rare but useless shitcoins , it is all about a combination of factors
bitcoin has a limited supply and a deflationary mechanism inbuilt in it , this all leads to every coin to increase in value as the time passes by
this is due to the fact that less and less "new" coins are mined and the old ones  slowly decrease in numbers
people lose their keys and access to their wallets , forget their passwords etc.
some experts think that 20% of the total supply of bitcoins is lost already , many of the addresses with copious amounts of bitcoins on them are dormant
lets hope that the status quo stays and we see no sudden dumping of the huge stashes that haven't been moved since 2010-2011
not even talking about the 1 mil coins that belong to Satoshi , even if  100.000 coins are sold in one day it could crash the price completely

This is also pretty much why it takes so much mining power to solve the algorithms. The distribution is split so many times due to all the miner in more of a fairway then fiat ever was. Fiat is not released t the public in exchange for any sort of proof of work but rather printed out as you said indefinitely as much as they see fit and who knows how often they do it behind closed doors. This is why crypto rules since you cannot hide such activity (not that you can print out bitcoin) due to the nature of the transparency of the blockchain.

Bitcoin you are told the rules upfront. You know what to expect and you know the supply. hell you even know the supply rate and how many transactions and movement is going on whenever you wish, no wonder the government doesn't want crypto ^^ They know they can no longer hide their corrupt financial dealings.

That has always been the main thing, bitcoin being scarce is one of the things that makes it valuable. If you check the two things that determine value in the economy, it is scarcity and utility and bitcoin has these two. That's the main things that are making bitcoin to be more desirable than other assets like gold.
 
As for the utility, just like some experts will always say, it has the potential to be a more efficient commodity. Another good reason people should like bitcoin is that it is decentralized, though I know that has its own downsides as well, being decentralized means that bitcoin cannot be tumbled by corruption.

I believe that there may be a correlation between the halvening and the price bubbles that seem to happen every 4 years. As the mining reward drops, Bitcoins are more scare and it leads to a price increase that eventually rises exponentially until the bubble pops.

core already implemented many things.
have you not realised that core regulated other dev groups out of BTC.. or do you still want to remain ignorant of history. even when gmax himself told you so recently

if core is the 'reference client' literally the CORE of the network. what do you think people are going to follow.
have you even realised how much control or power core have. or are you really trying to deny it still.

P.S core.. or more specifically matt corrallo changed some checking mechanisms in the last couple years and guess who approved it, gmax. and guess what that change done. made it possible to double spend.. luckily people realised it. but guess what had to occur.. no it was not a just release a client without the bug and let people download it.. but instead plead to core to change their code, where core asked the bug finder to keep quiet about it. and then LATER core eventually got round to releasing a fix.

yep asking people they have to download core as the solution because god forbid if the bug finder released his own fix core would go mental and call it as many names under the sun as they could think of

before even bothering to reply. just ask yourself, are you about to press the reply button for
a. defend a dev reputation
b.deny history of occurances without independant research
c. deny history of occurances because someone pro core said told you what to believe
d. reply just to be sarcastic and poke the bear as usual
or maybe
e. done some independant research without pro-core influence
f. actually think about things from a critical thinking perspective of the btc networks security without core defence mantra

if the answer sounds long the lines of a,b,c,d dont even bother.. i heard all your fan club speaches

P.S
devs are already doing it LN but LN's millisats are not compatible with BTC's sats. which is why the pegging locked transactions are at play between the TWO SEPARATE NETWORKS
(an LN payment is not a BTC transaction)

core devs hope to soon add 4 more decimals to btc so that btc and LN match to really mak it APPEAR as if its all the same thing, before too many people wise up that its 2 separate networks using 2 different units of account and 2 different 'ledger' formats

anyway bitcoins values( function) has always been '21mill btc' even though the number of decimals over the years have changed.
yep bitcoin 2009 didnt have 8 decimals
and in a few years wont have 8 decimals

but bitcoins value(price) is not based on the 18m in circulation. nor the potential 21m circulation.. bitcoins price value is based on cost of mining and the market rate where the supply is around 1.2m deposited in exchanges and put on order lines

Yes scarcity, as in limited supply, aka. deflationary coin. There is of course the way it works, how it runs code and not just obey the whims of an individual or a group of individuals that could change the rules at any point to fit their "needs". Node decentralization.

In short, the "no surprises" is an integral part of Bitcoin's value, along with limited supply. And of course, its technology that ensures its both safe and available; where there is no central authority that could be toppled to make it disappear.

Bitcoin complete is the sole reason it has the highest value in the market. Some people still don't get this, they cannot comprehend a non regulated coin is more valuable than a regulated one, precisely because there can never be surprises.

Your government can make you very poor overnight, as long as they wield the power to do so. Bitcoin takes that power away.

That's certainly true, mate. Satoshi designed Bitcoin to be a scarce cryptocurrency for a very good reason. With scarcity, you obtain a greater level of demand among worldwide investors. The less there is of an specific asset, the more valuable it'll be. This is just like Gold, where it's extremely scarce compared to other precious metals like Silver or Copper. Bitcoin resembles Gold, because it's very scarce relative to Fiat. National currencies experience constant inflation which turns out to be bad for the economy itself. But, a scarce cryptocurrency like Bitcoin, could benefit everyone in the process as it tends to become more valuable with each "halving event".

Despite this, 21 million coins in existence may not seem to be enough these days for the whole world. Luckily, Bitcoin's divisibility allows people to send fractions of a coin which is something not possible with Fiat. In the future, we could be sending "satoshis" instead of Bitcoins as it becomes extremely valuable by then. Imagine 10 "satoshis" being the equivalent of 10 cents (USD). We're still far from experiencing such scenario since we haven't reached the total of 21 million coins mined across the Blockchain. But rest assured, that Bitcoin will keep going as miners will earn from fees than the block reward itself. All in all, scarcity truly drives the value of Bitcoin towards new ATHs. Just my thoughts ;D

It is obvious that you have some link to Vertex.Market and eToro if you look at your post history. You start threads with a whole wall of text and then you mention either eToro or Vertex.Market in your conclusion.  ::)

I am not saying that the content is rubbish, but it would have been a lot easier just to put that in your signature if you wanted to spam the forum with free advertisement.  ::)

Sorry, if I burst your bubble, but it is quite obvious what you are doing.  ::)

yes scarcity I think is the main factor that makes bitcoin a valuable item. the number of requests and users is always increasing while the limited number of bitcoins will make bitcoin value more expensive in the future. and also bitcon will not experience inflation so it is not surprising if some people now trust bitcoin more than fiat money which is always eroded by inflation. when mass adoption of bitcoin can be achieved bitcoin will be a great alternative payment tool.

We don't need to wait to feel how the situation it would be as 86% of bitcoin have already hit the market. Of the 21 million bitcoins in total, more than 18 million are already in supply. Bitcoin generation after the 2020 halving would further decrease. So we can assume bitcoin would be traded similar to the way we are having now. The decrease in mining generation should complement by the increase in price to retain the miners.

Bitcoin being scarce is what most of the investors are looking after it right now. Before it was it's decentralization and anonymity on the talks but a lot of people has already accepted it and right now, we're looking on it at the other important aspects.

A person that doesn't know bitcoin or just heard it that it has a limited supply of 21 million would probably think that only 21 million people can own it. Needless to say about the whole explanation of owning it on decimal places, a very limited supply is like having a limited or rare collectors item that can be valued more than it has before.

Its really the reason. Scarcity meaning the demand is high and the supply is low. I think the number of people acquiring bitcoin is increasing. While the supply is steady or stagnant since investors are holding it to wait for the best highest price. As soon as it didn't happen the more the price is not rising and the people are holding on it. As soon as they will sell it. That's the time the value changes.

its not like having a batch of beanie babies where there can only be 210,000 ever made where there is no division of a beanie baby
heck i know of a 50pence piece(physical coin) that had just a couple millions coins minted. but that doesnt suddenly make it worth $8000
its like having 21million sky scraper size objects made of lego. but people can own thousands of lego
doesnt mean lego is rare, scarce

blocks of lego are not scarce. everyone can have them.

yea people say if you have a KG of lego the price you pay at retail to get 1kkg is worth more than oil
yet people dont think of it as bing just a few hundred thousand tonnes of lego

the 21mill coins is just a user interface basket/bucket term. its not actually about the amount of sharable units.
its been said many times in many tops and people keep forgetting the simple truth

the 21m number has been a fact the whole 10 years it wasnt originally 210mill that went down due to being more scarce over time.
21m has always been 21m

what has actually decided how volatile the price. is not the current 18m in circulation but the actual 1.2m in exchange hoard that are actually on the market order list actually affecting the supply/demand ratio

the other factor is mining cost. no one sells a minted coin for less than cost. thus they st a price or hoard until the price is right. if the cost was too much they stop making and selling and instead us the funds to buy as markets are cheaper than making. thus by buying instead of selling. they make the price rise.
as the supply demand ratio favours the demand

The deficit is exactly what makes the price of bitcoin so high, so I believe that in the future it will cost much more.

Yes, it is actually increasing based on the data and in a matter of fact there's already 1% of the total population who has bitcoin address, based on the data research of experts, with this we can see and tell that it is still very little, so  we still have long way to go, and since the supply is fixed and the demand is rapidly increasing, so imagine how much value it could have in the future.

Bitcoins maximum and limited supply is the reason why it is valuable base on the law of demand and supply but i think the word scarcity is not suitable which means bitcoin supply is not enough. Bitcoin has a limited supply but it doesn't mean that it will run out of supply. It will become more and more valuable as the time goes by because the demand keep on increasing while the supply is limited.

no MARKET price is affected by MARKET suply which is estimated at 1.2m coins. not the 21m coins.

the price does not move depending on the 1800 coins made yeach day but by the MARKET volume
lets word it another way

the price can TANK FAST is satoshi found his 20,000 private keys to release his 1m hoard all in one go
so could the MTGox hoard tank the price too

and those numbers dont affect the 21m but do affect what the MARKET supply has
again the 21m has ben a known figure for all 10 years
the 1800 coin a day is a known thing for a 4 year period.

neither the 21m nor the 1800 coin has direct affect on the market supply

   
When the number is 21 Million then it doesn't mean that there is any scarcity, I think sometimes supply creates its own demand so Bitcoin itself is a demandable product to this system because of having a worth value, I also think that Bitcoin is decreasing day by day as well as it's mining in these days, so the number is becoming almost equal, that's why supply is not the main issue to get scared of this platform anymore, I think the main scare factor is the price volatility which is the most effective factor in this system so far for me. sometimes people's got scared of volatility so they start panicked sell and in this way, This platform gets vulnerable.

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No. Anything can only be put into effect through consensus. If Core can "command", Segwit would have activated without drama.


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Building of an off-chain layer doesn't need consensus. You don't like it? Don't use it.

Plus there's no "peg", no IOU, no promise to pay in Lightning. Stop lying.

Scarcity in itself doesn't create value though. You can have as little supply as you want, but if there is no demand, there won't be any value.

I'd argue that the thing that gives Bitcoin value is its brand name, its first mover advantage. Everyone has heard of Bitcoin, but almost no one has heard of, say, Ethereum or any other altcoin.

Compare Bitcoin to the thousands of shitcoins that are also scarce and have limited supply, but are worth (almost) nothing because they have no brand name. It's not that they are technically worse than Bitcoin, some may even be better than Bitcoin with some cool features. Yet they aren't more valuable than it. Simply because Bitcoin was the first.

From the time that the best halving will end, I think that the supply of bitcoin ill really start getting hard and as mining off the coin decreases also, the value of bitcoin will start increasing so much which I think this is why many of the people you see are still holding their coins for no until that time when bitcoin will become very high before they start using it for payment.

I know that it is good to use bitcoin for payment, but who would want to miss put off this reliable coin increase when the time come. I know that none of us will be alive when the last coin is being mined and all those generations then, especially the ones that we have left our coins for are the one that will fully enjoy it then when bitcoin value rise to about $1 million.

scarcity occurs due to the increasing number of requests while the number of goods desired is limited. this is what makes an item scarce and makes it a valuable item and its value will also increase. the number of bitcoins is limited to only 21 million coins and each year the number of bicoin that can be mined decreases but the demand for bitcoin continues to increase. this is what causes the price of bicoin in the future will be more expensive. with this method bitcoin is protected from inflation which usually occurs with fiat money.

21 million bitcoins and not to mention the amount of bitcoin that had been lost by some users, sent to a wrong/non existing address, unaccessible wallets, lost private key, and etc. That would make a great difference. As bitcoin adaptation grows the demand will be high and applying the basic conceppt of supply and demand, the price will surely rise.

this factor can also move upside down if 60-70% of bitcoin is owned by several large groups, and only gives users the opportunity to take the rest. bitcoin will continue to move in large fluctuations associated with manipulation. Scarcity will make bitcoin a higher value but most people will be more dominant against altcoin. Bitcoin will face a crucial problem in volume spread.

The scarcity without a doubt plays a role in how valuable bitcoin really is, but something could be very scarce and have no value at all because there is no demand for it, bitcoin combines almost all the characteristics of gold that makes it such a great form of money and then adds many other characteristics that makes it even better than gold.

Unlike gold we know exactly how many bitcoins are going to exist and not only that we have a very precise idea of how many bitcoins are going to be created each day, each month and each year, we could not ask for a more predictable coin even if we wanted to, and things get even better when you consider that unlike gold bitcoin is digital and you can carry it around without bringing attention to yourself and without having to give any explanations of why you are carrying so much bitcoin with you.

You definitely have a point there. Scarcity definitely does combat inflation, and we know Bitcoin was invented as a response to the global recession in 2008 (as well as for other reasons). With that being said - you're spot on in that we have to acknowledge that demand drives up the price.

Absolutely! Naturally supply drives demand, and Bitcoin's limited supply does have influence over the price. As we reach the total supply cap, it's very likely that Bitcoin's price wil climb. We're currently at about 18 million, so let's see what happens.

You're absolutely right - scarcity plays a huge role in combatting inflation. Which is one of the reasons why Satoshi Nakamoto decided to develop it in the first place (global recession). It'll be interesting to see what happens when mainstream adoption occurs - how will demand influence the price then?

That's an interesting example, thanks for sharing! Bitcoin's scarcity definitely does drive demand, and also combats inflation. The fact that it happens to, as you said, meet the specifications of a global mainstream currency in terms of functionality is also important when it comes to mainstream adoption.

It all comes down to the basic principle that is the higher the demand the higher the price and also the lower the supply the higher the price. Bitcoin is a good manifestation of this principle wherein the price surge so high because it both has high demand and low supply. Also, this I think is what makes Bitcoin to survive compared to fiat in times of crisis. On top of that, what made the value of Bitcoin rose so high is because of the features like how decentralize it is and being peer to peer which made the people stay.

Agree. Bitcoin has obtained its value mostly because of its branding recognition within the mainstream world. It's the first coin it comes into mind when anyone joins the world of crypto. It could have an extremely limited supply, but without demand, it'll be a worthless cryptocurrency across the market. I've seen some cryptocurrencies that are pretty undervalued considering their level of scarcity across the market. Litecoin is a good example of a coin that's much scarcer than most popular coins on the market (like Ethereum) but it's extremely undervalued these days. The only coin I believe that it retains its value over time is 42 coin. Right now, it's worth an average of $16,895 across the crypto market. This is odd for a coin that's not well-known within the crypto industry.

As for Bitcoin, it's hoped that each block reward halving would contribute towards its price in the long term. But the definitive indicator of its value, would be how much demand it experiences within the market. If people aren't deeply interested in Bitcoin, then I see no reason why it should increase in price for the foreseeable future. Just my thoughts ;D

For sure. You said it!

I think that it's not just the scarcity, but also the fact that the most powerful computer network in terms of processing power stands behind supporting this supply and the per-determined schedule for releasing more bitcoins. Every participant in this network holds a mutual interest to uphold these standards and any deviation would imminently have them kicked-out of the network, without being able to enjoy the monetary incentive of mining so long as they support different standards than the ones set in stone in the BTC chain.

Bitcoin has been divided into 8,000,000 satoshi units per Bitcoin.  Bitcoin is only harder to mine and the value of Bitcoin is raised by the fomo of the community.  Currently there are many individuals, businesses, large investment funds own it.  In the future we can only comment that Bitcoin is reducing circulation because people are turning to holding rather than trading.

Open your eyes people. Bitcoin would never or would take a long time to have a scarcity. Yes we do have 21 million supply of Bitcoin but we have what we called decimals. Let's say there's no more Bitcoin to mine, people can just move decimals and we wouldn't noticed it even if the coded supply is only 21 million Bitcoins. There will always be more supplies. The real driving price of Bitcoin right now is its technology, not its supply.

I think you don't understand the point this person is trying to make here. What this person is trying to say is that scarcity is one of the main things that influence the markat value of Bitcoin. And the reason was that Bitcoin has a fixed number of total supply which is the 21 million cap. He believes that the number of total bitcoin in circulating as some kinda scarcity nature to it. With a fixed number of total of supply, once demand increases, this will cause bitcoin to be a bit scarce which will cause the value of bitcoin to increase.

Bitcoin deficit, which is associated with its limited amount, I do not think it will play a big role in its price. In any case, not so much that Bitcoin has too much price, as many predict. Cryptocurrency is now developing very quickly, new types of cryptocurrencies are emerging that outperform Bitcoin in terms of capabilities and usages, and this significantly covers the shortage of bitcoins. Of course, bitcoin has its own characteristics and this will always determine its value among cryptocurrencies. However, not so much that it had a price of hundreds of thousands of dollars.

The low supply of bitcoin and great demand of it make the volume in every exchange high. This is why bitcoin is the most expensive cryptocurrency today. There are also low supply coins yet they are not in demand with traders. Even bitcoin has 21M only, if there is no buyer then the price of it will never goes up. Demand and supply are the reason why the price goes down and up.

No, bitcoin is scarce and you are only talking about cosmetic chances, this is the equivalent of having a ton of gold and then claiming that we can increase its supply by using that gold to create many one oz coins, the supply of gold is still the same what changed was the way it is represented and nothing more.

Without a doubt the technology of bitcoin is one of the main drivers for the adoption of bitcoin through the world but to deny the supply has a huge effect as well is to close your eyes to the reality of the market.

Scarcity indeed,

In the future not too far away there will be high demand by people looking to have Bitcoin
and the growing number with it not willing to sell to meet that demand.
There will be an awful lot of people kicking themselves for not believing.

At the moment the target for many is to own BTC1
as the value increases that target will reduce

I think we are still at the early stage of BTC

Scarcity and demand are part of the main contributing factor in either the increase and decrease in the market value of Bitcoin. These two factors are the underlining elements in the crypto and the economical space that influence the value of products in the financial ecosystem. But looking at the Bitcoin market now, scarcity does not really matter in terms of market value of Bitcoin. Bitcoin is not really scarce in the crypto market now. This means scarcity is no longer the leading factor of determining the market value of bitcoin. The real determinants of the market value of bitcoin are not really known considering the current state of the bitcoin space.

Scarcity alone is not a factor. 3 legged horses are scarce, but you wont pay a lot for one. Bitcoin is scarce combined with being useful. More people want to use bitcoin for its properties, and combined with being scarce, the price rises as demand grows. On top of this, bitcoin also has the property of being more sought after as the price goes up...the higher the price goes, the more people want it.

For me, as long as we think that obtaining 1BTC is still possible for an average person, then we can say we are still at the early stage of bitcoin. Basically, after the halving and the price goes way too high, we will have difficulty in obtaining Bitcoin and we can consider ourselves late when it comes. So, for the meantime, as the price of bitcoin is still achievable, we can do our best to accumulate for the future. Though, the most efficient way for me to do this is to be active on the market. Do not just hodl but to trade when the market falls and trade when it recovers.

Agree. We're still in the early stages of Bitcoin. As the pioneer cryptocurrency improves over time, people will find it to be quite useful as a currency for daily transactions. The block halving would greatly contribute towards Bitcoin's scarcity in the long term. With scarcity, comes demand as people will find the pioneer cryptocurrency an attractive store of value just like Gold. As price increases across the crypto market, it'll be much more difficult for the average person to get ahold of 1 full Bitcoin. This would eventually lead people to transact in "Satoshis" instead of a Bitcoin, within the future.

Nonetheless, scarcity may be one of the leading factors of Bitcoin's value. But, it's not a guarantee that Bitcoin will become much more valuable over time. There needs to be demand from people in the mainstream world, for Bitcoin to be considered as a valuable cryptocurrency. As more people buy Bitcoin, the price will increase within the market. Considering that prices are still low these days (compared to BTC's latest ATHs), it could take a little longer than expected to see higher prices even after the next block halving event. Just my thoughts ;D

If bitcoin really becomes as popular as we think and it reaches its potential of being a worldwide currency that can be used without the permission of any government then one single bitcoin will be more than enough to help you dramatically in your life and if the growth of bitcoin coincides with the weakening of fiat currencies and the economy as a whole then you can be sure that that bitcoin will buy you a lot of things in the future.

Even if we are not early adopters we are still part of an early minority so we still stand to get many of the benefits of bitcoin but there is only one condition and that is that you hold your coins despite everything that happens and many cannot do that unfortunately.