Bitcoin Forum

I was doing some research to add to my understanding on Bitcoin and discovered that many people still do not know how powerful Bitcoin can become in the future. Bitcoin was built differently and to be scarce, the total supply of Bitcoin is fixed but the circulating supply of Bitcoin will always be shrinking and this would not only be happening every four years because of Bitcoin halving but it is happening frequently because of the lost of Bitcoin that might never be tradable again. If anybody knows how valuable scarce things are then they can be able to see how important Bitcoin is going to be when this knowledge gets understood by the world.


Money needs to be scarce to preserve its value and Bitcoin is scarce therefore the future of money has to be Bitcoin and this is one of the best chances we have to accumulate it before it becomes more scarce.

For me Bitcoin was a great innovation in history, those who know its potential will love to be forbearing and give time to see some multiplication in their investment. Because of its discovery, we step up in the evolution of new technology which is popularly get the fame as Blockchain technology. Due to its existence, we get the infrastructure for digital payment systems without the interference of any intermediaries or centralized bodies, also have some popular currencies like ETH, BGB, BNB, SOL, MATIC, TON etc. utilising these emerging features of Blockchain.

That's why it's such an important thing for bitcoin to hodl, got to remember that when it becomes even more scarce as time goes by, it will probably become more and more valuable thus it's a good thing to hodl bitcoin for the long-term and people still don't get it, the limited supply is a ticking time bomb to a really huge profit to whomever who will hodl bitcoin for the longest time, it's basically a century-long test of someone's patience. Even if you lose that test at the middle of the way, it's probably still a good thing because you're still going to get a lot of profit out of it but the caveat is that while you were hodling through those years, you're also accumulating your bitcoin to increase your stash.

Not exactly. Scarce goods that are in demand are valuable. Never forget this second part of the equation. Then we can go into whether scarcity is a good reason for people to demand it, and it probably is, along with other factors, such as being decentralised and being able to be transmitted quickly.

That's not accurate.
The circulating supply is technically increasing even if there are coins being lost every day because there is new coins (about 450 bitcoins) are entering circulating every 24 hours. For it to shrink, more than 450 coins have to be lost every 24 hours.

But overall you are correct that with the capped supply and a decreasing reward we have scarcity in bitcoin and lost bitcoins contribute to that scarcity as well.

How exactly does "costly production" improve scarcity?
I'm not sure if this photo was designed to talk about Bitcoin because in Bitcoin even if it costs $0 to mine blocks, the supply will still remain scarce.

Technically the only currency in the world that has been able to come close to the definition of money is bitcoin.

FWIW and to put simply currency is a medium of exchange and money is a currency that is also a store of value.

Exactly my friend, and what caused the devaluation as the government continued to print. Indeed, money continues to circulate, but its value is no longer in accordance with the price of goods for now if we want to shop for something.

Of course, this cursory study leads to the fact that Bitcoin also offers an option that can be used as a protection option against inflation while being decentralized in nature and Security on the other hand can also be used as a tool for Investment and Storing Value.

Price will be more up in the future because the demand of BitBTCcoin and use-case also increasing day by day also most of the wallet holder dead and there bitcoin already gone to the blackhole so the price can be reached unbelievable amount in the future.


https://miro.medium.com/v2/resize:fit:1400/format:webp/1*qOkQhtdK4Cs_BlmtS4YY0w.png

Halvings don't make the circulating supply shrink.

Anyway, scarcity is not the main thing about Bitcoin. I guess it's secondary, along with other features. If it's scarcity that matters most, then anybody could make their own version or fork that's scarcer.

The main thing about Bitcoin is decentralization. That it has a fixed supply is a great addition, of course. Coins may be more coveted because they're scarce, but this only follows if there's demand. Scarcity alone doesn't create demand, however.

Bitcoin's security as a currency, being decentralized, precedes scarcity.

coins in circulation do not have much impact on the price..

the market price is impacted only by the coins on the market order books. the supply on market orderbooks is not the same amount that is on the blockchain circulation

the biggest impact of market price range is the mining COST
if the cheapest cost to mine on the planet was $25k/btc 6 months ago but now $50k no one on the planet can mine for less than $50k which influences the markets new 'bottom' no one wants to go below.
no one mining wants to sell at a loss and too many people with higher mining costs then see $50k as the new bargain price so this creates a value support line threshold

the limited supply of 21m and the effects of the less coins per halving cycle add extra amounts of specilative desire/need/demand to the minimum value that give it a speculative price above the minimum value

Scarcity is important but without a doubt it plays second fiddle to decentralization, otherwise if bitcoin was centralized, it would not exist as its servers would have been confiscated already by governments all over the world.

We also have very direct examples of scarcity not being such a big deal, as there was a time in which altcoin developers in order to try to gain enough users began to burn some of its supply, and they make it seem as if this action will increase the value of their coin, but without a high demand already, burning the supply of their coin was nothing more but a gimmick.

Don't have inflation is key, not scarce because with same total and circulating supply, with time there will be more people in one country or on this planet and demand on that currency will be higher. It helps to increase its value but the first condition is, that currency must be accepted and used widely already. Better, it is legal tender already.

You can fork Bitcoin source code, create your currency but if nothing to make it interesting for people to use it, it will have no value now and next 50 years.

Keys are: have good use case, utility, good value, adoption, not inflationary or better deflationary, with time its value and price will increase. Scarcity does not decide value or price if other things don't exist.

Year finance's YFI token (https://coinmarketcap.com/currencies/yearn-finance/) is an example that scarcity does not help value and price.

It has only 36,647 YFI tokens in total supply but its price is only $7,236.

I do agree that scarcity plays a role in the value of an asset. For Bitcoin the value is mostly derived from the demand. Scarcity obviously plays a role as I had mentioned but that's not the only thing. We have multiple cryptos available with even smaller supply but they are not as valuable as Bitcoin. Scarcity is just one parameter to success here but no the only one. There are other parameters as well and also the demand of an asset plays a major role in making that asset valuable. Don't loose your sleep over the scarcity parameter.

I don't think that we can do that as we all know that BTC is controlled by the big investors not by ordinary traders that trade daily on long term just for the sake of certain profit.

These investor manipulate that market like the way they want and they don't care much about the sacrity of the BTC but they just want to have good profit for themselves not matter how many traders will go through the loss they don't care.

Scarcity is not that important, if there were 42 millions coins instead of 21, the protocol would have the same value (but we will probably have a lower price, and people will likely have more coins). The fact that we have a FIXED SUPPLY is the important point imho.

It is proven that the amount of people who are yet to accept Bitcoin is far much greater than those who would dismiss Bitcoin and this would definitely raise the demand for it. If we do have to compare the rate of adoption in Bitcoin over the years we can tell that it has improved with good significant figures which creates more demand and if in addition with Bitcoin scarcity then we can experience a price hike. Bitcoin Scarcity is important just as demand is, both should have to work together.

What you just mentioned is part of the things we have in consideration for the adoption of bitcoin over the fiat traditional system and currencies because the monetary policies with governments are what permits for the continuous printing of fiat currency and that is why you could discover the unending increase on inflation rate over the economy and this is really affecting local currencies and economic growth, while the masses are most affected, but innother to evade this effect, people were adopting for the use of cryptocurrency for thier own personal advantage after they discovered it's benefits.

Indeed, creating a currency with a scarce supply is not that difficult, and I have never appreciated the supply factor as what makes bitcoin so special. What makes bitcoin special is the use cases, the benefits it offers, and decentralization is what makes bitcoin special because no other asset has this feature. An asset has value and its value will be determined by demand, if an asset has a limited supply but people don't need it then it will become useless. Not only the OP, many people still have the misconception that supply is the most important factor creating bitcoin's reputation.

Op let me start by spotting out the fact that the graphical representation of supply in this post is wrong for that of the one you illustrated as the one you intended for Bitcoin. The reason is simple.
The supply of Bitcoin isn't actually increasing slightly like the graph is illustrating, however it is constant. Bitcoin has a constant supply cap of 21 million coins. The economic aspect behind it is the rate at which coins are circulating. The rate at which new Bitcoins are added from the supply to the circulation is cut in half after every halving event. This causes demand to rise thus causing the value of Bitcoin to increase.

The graph you used op should likely fit better for the demand of Bitcoin after every halving event but still for a proper analysis it isn't supposed to be a straight line graph or chart.

Here are two graphs for illustration


Bitcoins pumped into circulation is constant every 4 year but it's halved after every halving event.

Although there is no doubt the power of Bitcoin is Increasing day by day and we have seen its value increasing over time. Those people or institutions who used to pass scary statements about Bitcoin have now also started to believe in it and start to invest in Bitcoin. BlackRock world's biggest company was also believed that Bitcoin is an illegal thing and used for money laundering but if we see today this institution is also highly involved in the Bitcoin investment. Well, we also can see some of the negative comments passing people around us also these days and the reason behind that is they are illiterate and have insufficient knowledge about the ecosystem of Bitcoin.

haha, I used to listen kind of stories from others who don't believe in Bitcoin that many people lost big money in Bitcoin indeed there is no doubt people may lose their money here but they should also focus on their approach like what are they doing many of them lose their money in Future trading with high leverage, some of them use insecure wallets to store their bitcoin just because of insufficient knowledge. They should conduct good research before entering into the crypto industry that insecure wallets can be compromised easily so if one is losing money here in the crypto space, most cases rely on their own mistakes.

In the end, I would say a good amount of knowledge is required for one to survive safely in the crypto space/industry. So always conduct DYOR if you find any term different and doing this may add up to your knowledge. Many Thanks

This is exactly the reason why burning bitcoin or any cryptocurrency is a thing.

People attempt to remove some bitcoin out of the circulation so that its supply decreases therefore increasing more of its value. They do this by sending bitcoin into an address only to never be accessed ever again.

Even though that might seem like a good thing, it has consequences associated with it. By burning bitcoin it might never be used as a currency and will just be used as an investment tool.

Considering it is so highly divisible, Bitcoin can be used as a Currency even if only a rather small amount of it remains available.  I do not think it would be a problem.  The 'burn' happens naturally anyway, even if people do not send Bitcoin to inaccessible Addresses.

Also.  Consider at some point in the future some body may out of complete luck generate the Private Key for that particular Address and the whole 'burnt' Bitcoin goes into circulation once again.  You just never know.

Besides.  Do these Addresses contain such significant amounts anyway?  Last time I have seen their Balance, it did not seem like they had a big impact on the scarcity of Bitcoin.

People used to lose their Bitcoin when Bitcoin didn't have much value and they barely cared about their Bitcoin holdings. If you or I were from that time, we had either mined Bitcoin with our home CPU, claimed from free Bitcoin faucets, or bought then at an extremely low rate, we would also tend to care less about them, we would either sell them for whatever rate it had at that time or a later time when it got some value.

Things have changed now, Bitcoin is extremely valuable and every person understands this now. So the chances of someone losing their Bitcoin these days are extremely tiny because anyone who spends thousands of dollars to acquire a small part of it would take care of it very well and will make sure they have backed up their wallet and necessary information so that they don't lose access to it.

I will revise your subject.

Bitcoin is more than a currency or security it'sor scarcity, but are decentralized, secure and private!

If Bitcoin didn't have one of three I mentioned above, I doubt Bitcoin can grow as high as now since there's a weakness in Bitcoin and it would make people to not completely trust in Bitcoin.

Why do altcoin projects create a large supply and then announce a partial burn, and why don't they create a coin with a small supply in the first place? Don't be so naive as to fall into those silly traps, burning supply is just one of many tricks that makes investors believe that when scarcity occurs, an increase in value is inevitable.

Are you brave enough to send your bitcoins to those dead wallets to increase the value of bitcoins? The value of bitcoin depends on the use cases it brings us, supply is just one of many factors that contribute to bitcoin's success.


Don't rush to think about that scenario, look at what's going on, do you view and use bitcoin as a currency or are you looking at it as an investment to generate high profits? I think limited supply is not a good reason to deny that we don't use bitcoin as a currency.

Before preaching about money and bitcoin you should really study Bitcoin more.
The circulating supply of Bitcoin is always increasing and will do so for a long time from now, the amount will not shrink (unless major accidents) for decades to go.

Second, scarcity doesn't mean something has value, there are thousands of tokens/coins /altcoins /forks that are also "scarce" but this doesn't mean they have value, it would be enough to look how the 21 million forks of Bitcoin have the same supply and issuance and BCH is $500 while BSV $60.
One needs utility before scarcity to have some value!

Scarcity is a good principle because it saves from overprinting and thus hyperinflation, but it's impossible to get it perfect for each case all in advance. That's why fiat is usually monitored and policies are adjusted based on what's going on. Sometimes they are adjusted poorly, but usually it works okay. The thing with money is that most economists seem to agree that it shouldn't grow in value, and it shouldn't even preserve the same value over time. In fact, it should lose value at around 2-3% annually to motivate big purchases and economic growth. Bitcoin is rising in value significantly over time, and while it's great news for investors, it might also be a challenge to BTC adoption as money because people want to hodl, not spend.

You have started a good topic, this factor/feature of BTC definitely needs more hype. As in the long run scarcity of BTC is the main factor that plays an important role in driving its price in a positive trend. Otherwise, if it would be normal fiat then there would be a need of centralized authority, that could implement Interest rates, or pegging it with limited supply of commodity like gold. That would be against the context of BTC.

Therefore I am glad that Satoshi put scarcity factor in it. Besides BTC I was confused why you said money need to be scarce, as I do understand that to save the value over time just like BTC is doing, but till now I did not saw a single country that have this feature of scarcity directly implemented in there currency although they do adopt other option to limit the circulation or printing of money, like increasing the interest rates, which stops people to borrow more money thus lesser printing and circulation, there might be other ways too, like open market etc.

People have different understanding in Bitcoin that is why you see many people explain bitcoin differently you will see also people who is saying that bitcoin is a scam tea today so what I want us to understand is that the 100 years coming there's some people who will be saying bad about Bitcoin there will be also a set of people who will discourage people not to embrace Bitcoin so from my own understanding someone saying good about Bitcoin it is person that have already make a proper research of Bitcoin and no the values and advantages and the disadvantages of Bitcoin so the journey of Bitcoin is a personalist and it is best on your own conception

Definitely bro I agree with you that if Bitcoin doesn't have any of these things So people will not trust on Bitcoin.
 
Decentralization, Sscarcity are the two important factors, which I think make Bitcoin promising to the world. Scarcity's greatest quality is that it influences the store of value, which also depends on decentralization. Despite these two qualities, they exist within Bitcoin. So I agree with you that if these two factors were not present in Bitcoin, people would not trust it as much as they do because of the lack of a value store and the lack of a decentralized ecosystem, that is, without scarcity and decentralization functions, Bitcoin would be considered a lay coin.

Basically we all know that Bitcoin has a limited supply of 21 million Bitcoins and 19 millions have been mined already so as the remaining 2 million Bitcoins is coming closer to being mined that is how Bitcoin will become more scarce and the value will increase and that is what will make Bitcoin get to the moon when the demand will outsmart the supply so what you said is very true because any one who is aware of how scarcity works will know that now is the time to accumulate and keep in your custody before it gets to a point where it will become unaffordable when the price will skyrocket to a crazy ATH.

You must use correct term.

Supply is a confusing term. You can use Total supply or Circulating supply. The total supply, that is implied in your post, is capped at 21 million bitcoins. The circulating supply will increase and after four halvings so far, the curve for circulating supply will increase slightly in future years.

How is the 21 Million Bitcoin Cap Defined and Enforced? (https://blog.lopp.net/how-is-the-21-million-bitcoin-cap-defined-and-enforced/)

You can use these available charts.

https://blog.lopp.net/content/images/size/w1140/2022/01/bitcoin-inflation-chart-1.png

Yes and the banning of some countries are a proof to that. There are countries where BTC is not banned but there are still people who ignore BTC. BTC is already scarce due to its fixed and limited amount of supply. There is also halving which makes BTC even scarcer.

I don't think that the circulating supply is going to shrink but it can actually grow in size the more the new BTC have been mined and the more the adoption we have. BTC is not a secret anymore. There are now plenty of information lying around and people already know its true worth, so gone are the days that people will less care of their BTC, up to the point that they will lose it. IMO I think it's okay if money is not scarce but as long as its value remains the same.

That's right , we need a combination of decentralization and scarcity to create value for bitcoin , without one of the two bitcoins would not be as attractive as they are today. But I value bitcoin's decentralization more than any of its advantages because no other asset is as decentralized as bitcoin, and that's what we've been looking for for a long time. Scarcity is important but is useless if not combined with decentralization. Because creating an asset with a scarce supply is not so difficult, but creating a decentralized asset like bitcoin is not easy and so far only bitcoin is unique.

I am little confused, are we talking about Bitcoin as money or as investment?

Money is not supposed to be scarce but it should be finite unlike fiat which can be printed as much they want and people who hold it no control over how much money will be printed so they can't really use it as store of value.

Money should be convenient, accessible although Bitcoin can be both money and asset but you're not really talking about it's decentralisation just the profits.

Thank you for this information, you are very correct, I thought I learnt something important and wanted to share it with everyone but I did not get the information correctly. I always have an open mind to learn and get corrected because it will help me become a better person. I have looked at it again, scarcity has no effect when there is no utility for the product. An item that people do not want would not have value in spite of it being scarce and the examples of Bitcoin forks makes the point more clear. I did some research on the coins you mentioned and they are trading below Bitcoin in spite of their founders claiming that the altcoins are more Bitcoin than the actual Bitcoin. I see people are just greedy and want to take all the credit for Bitcoin success meanwhile the real founder born rounders are running away from all the attention and in the hiding.

Bitcoin isn't just a currency or investment; its true essence lies in its scarcity. With only 21 million coins ever to be mined, Bitcoin (https://www.bsetec.com/blockchain-development-company) becomes a digital rarity, akin to digital gold. This scarcity ensures its value and makes it a sought-after asset in today's economy.