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Author Topic: There are only 21 million bitcoins and they are divisible to 8 decimal places  (Read 1947 times)
Astrohacker
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July 25, 2011, 11:49:01 PM
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When I introduce people to bitcoin, some of them immediately assume they are worthless. They say things like, "oh, come on!" as though bitcoins are play money. Then I tell them that there are only 21 million, and then their attitude changes. Suddenly, bitcoins have value to them. Then they say things like, "so if I have just one bitcoin, when everybody uses them, I'll be rich."

Another thing that comes up time and time again is that bitcoins are divisible down to 8 decimal places. When I tell people this, they say things like, "oh, I see. So they really could be a global currency."

So once you explain the big picture facts about bitcoin to people, they often get it, and they realize that bitcoins have value.
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Sukrim
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July 26, 2011, 12:52:41 AM
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The only "tiny" fact that you're most likely NOT telling them is that currently 0.1% of all bitcoins ever get created per day. Go and calculate the annual inflation rate of that and be amazed...

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July 26, 2011, 12:55:40 AM
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The only "tiny" fact that you're most likely NOT telling them is that currently 0.1% of all bitcoins ever get created per day. Go and calculate the annual inflation rate of that and be amazed...

It's very temporary, constantly diminishing, and following a set pattern known to all market participants.

Inflation for Bitcoin falls to zero. Value for USD falls to zero. Big difference.
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July 26, 2011, 12:57:19 AM
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I don't really agree they have value just because there is a limited number of them... But I guess that could mean something to some.

They will continually be lost/deleted/destroyed overtime so it will be much less than 21 million I would say as well.

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July 26, 2011, 01:28:44 AM
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The only "tiny" fact that you're most likely NOT telling them is that currently 0.1% of all bitcoins ever get created per day. Go and calculate the annual inflation rate of that and be amazed...

I think your math is off.

A block is created every 10 minutes (that's the target anyway). That's 50 bitcoins per ten minutes, or 300 per hour.  Times 24 hours equals 7200 btc per day.

7200 / 21000000 = 0.00034285, which is 0.03% per day.

Of course, blocks are actually found more often than once per 10 minutes (at least while the difficulty is rising).  But the rate you quoted, 0.1% is triple the 10-minute-per-block rate.  0.1% of all bitcoins would only be mined in a day if a new block was being found every three minutes instead of ten.  But if that were the case, difficulty would triple every time it adjusted, instead of going up about 10% give or take like it's been doing.

With difficulty going up 10% per adjustment (average), the rate of bitcoins per day is about 10% faster than my calculation of 0.034%, which means the real rate is about 0.037% (percentage of all bitcoins mined each day).

Additionally, even if we were to use your figure (0.1%), the annual inflation of that compounded daily over a year, is 1.001 ^ 365, or 1.44 = 44% annual inflation, which although high is not that amazing. Especially in light of the fact that, although the supply of bitcoins is growing at that rate, demand for bitcoins (which is still in infancy, really) is also growing quite rapidly.  Plus, the supply growth rate of bitcoins is GUARANTEED to slow down (by half in 2013, then by half again every 4 years, stopping completely eventually).  And that's using your number which is off.

If we use my figure (0.037%), that compounded daily over a year equals a 1.00037 ^ 365 = 1.1445 = 14.5% annual inflation.  Not so bad at all.


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July 26, 2011, 01:33:41 AM
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I don't really agree they have value just because there is a limited number of them... But I guess that could mean something to some.

They will continually be lost/deleted/destroyed overtime so it will be much less than 21 million I would say as well.



That's not the only reason, but scarcity is important.  When I first tell people about bitcoins, they want to know what prevents 'them' from just printing more bitcoins.  People compare bitcoins to beany babies or pogs, which started off as having some real scarcity, until the companies behind them went crazy and made more, destroying the value of all of them.  It's important that something like bitcoins is immune from greedy-founder-syndrome.
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July 26, 2011, 01:34:55 AM
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The only "tiny" fact that you're most likely NOT telling them is that currently 0.1% of all bitcoins ever get created per day. Go and calculate the annual inflation rate of that and be amazed...

I think your math is off.

A block is created every 10 minutes (that's the target anyway). That's 50 bitcoins per ten minutes, or 300 per hour.  Times 24 hours equals 7200 btc per day.

7200 / 21000000 = 0.00034285, which is 0.03% per day.

It will take still some time until even half of that 21 million are mined.

Currently we're nearly at 1/3rd --> 7 million BTC, not 21 million.

~7000/7000000 = ~0,1% per day

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nafai
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July 26, 2011, 01:38:28 AM
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Oh I see, you're saying that the rate at which bitcoins are created compared to those that have already been created.  Okay.  My bad.

Of course, that means the first day of bitcoins they were inflating at infinite percent Smiley

Still, I don't think 44% annual inflation is extraordinary.

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July 26, 2011, 02:04:32 AM
 #9

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The only "tiny" fact that you're most likely NOT telling them is that currently 0.1% of all bitcoins ever get created per day. Go and calculate the annual inflation rate of that and be amazed...

I think your math is off.

A block is created every 10 minutes (that's the target anyway). That's 50 bitcoins per ten minutes, or 300 per hour.  Times 24 hours equals 7200 btc per day.

7200 / 21000000 = 0.00034285, which is 0.03% per day.

It will take still some time until even half of that 21 million are mined.

Currently we're nearly at 1/3rd --> 7 million BTC, not 21 million.

~7000/7000000 = ~0,1% per day
So not taking in the decreases in the generation rate, we have:
Current year + 0: 37.5%
Current year + 1: 27.3%
Current year + 2: 21.4%

As the trend in the exchange rate has shown, demand is far exceeding the rate of inflation of the supply of Bitcoins.
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July 26, 2011, 05:48:23 AM
 #10

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The only "tiny" fact that you're most likely NOT telling them is that currently 0.1% of all bitcoins ever get created per day. Go and calculate the annual inflation rate of that and be amazed...

I think your math is off.

A block is created every 10 minutes (that's the target anyway). That's 50 bitcoins per ten minutes, or 300 per hour.  Times 24 hours equals 7200 btc per day.

7200 / 21000000 = 0.00034285, which is 0.03% per day.

It will take still some time until even half of that 21 million are mined.

Currently we're nearly at 1/3rd --> 7 million BTC, not 21 million.

~7000/7000000 = ~0,1% per day
So not taking in the decreases in the generation rate, we have:
Current year + 0: 37.5%
Current year + 1: 27.3%
Current year + 2: 21.4%
As the trend in the exchange rate has shown, demand is far exceeding the rate of inflation of the supply of Bitcoins.

The exact yearly rate of increase for the number of bitcoins is a rather important piece of information.
I believe the following is the correct data, and it looks like it should probably be in the wiki as the topic has come up repeatedly:

Year New BTCs/yrStart BTCsEnd BTCsBTC Increase
2009 262500002625000infinite
2010 262500026250005250000100.0%
2011 26250005250000787500050.0%
2012 262500078750001050000033.3%
2013 1312500105000001181250012.5%
2014 1312500118125001312500011.1%
2015 1312500131250001443750010.0%
2016 131250014437500157500009.1%
2017 65625015750000164062504.2%
2018 65625016406250170625004.0%
2019 65625017062500177187503.8%
2020 65625017718750183750003.7%
2021 32812518375000187031251.8%
2022 32812518703125190312501.8%
2023 32812519031250193593751.7%
2024 32812519359375196875001.7%
2025 164062.51968750019851562.50.8%
2026 164062.519851562.5200156250.8%
2027 164062.52001562520179687.50.8%
2028 164062.520179687.5203437500.8%
Sukrim
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July 26, 2011, 01:23:47 PM
 #11

By the way, the above table is in "Bitcoin time" --> if difficulty had kept at 1, this would be correct.

In "Bitcoin time" (= 6 Blocks per hour etc.) we should be past summer already... Wink

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