How do we know there are actually only 21M BTC?

[Donneski]

Already, the total supply cap of 21 million Bitcoin has been programmed into it's code and because Bitcoin operates on a decentralized network that allows no central authority to change its rules, it's impossible for us to have more than 21 million Bitcoins on the Bitcoin network. Since 2009, the cap have remained unchanged and will continue to be unchanged till the end of time

[Findingnemo]

The amount that actually and provably can circulate is even lower and adds to the scarcity of Bitcoin. I can't predict the future but I assume that the finite emission amount won't ever be changed as it is one of the key pillars of Bitcoin.

Which is true but I guess OP is talking about other forms that people use in the name of Bitcoin whether it's WBTC, or other tokens, and ETFs and what else we might have in the future. at some point, people will not be really using the real Bitcoin. Still, use which are issued by others can be a bank or any company that tells the users to 'Trust us, we don't cheat' and unfortunately, people fond of doing that. If I just think of the evolution of money more or less the things started in this way, but with gold or other things, they considered it as valuable.

But later the banks came in as middlemen and they issued receipt that bound to have a value of x amount of gold and later people started using the receipt which later turned into this whole fiat system.

[Dunamisx]

Sorry for clickbaity title, obviously there will only be 21M BTC.

But with more banks, institutions, and CEXs trying to custody the BTC and creating ETFs, options, and perhaps other derivatives in the future, how can we be sure there won't be an "infinite" supply of these synthetic "shares" of BTC?

I don't think all these will affect the total number of bitcoin supply by then, after the whole 21m bitcoin has been mined, i don't also think this is something we may have to worry about, because the idea behind this is to find a means to how people can stop the incidence of inflation over the market in general using the bitcoin approach after being developed, once there is a finite supply, it will be well sustainable because what we already have has their number and everyone can by then try to sell at the rate they which to, this is part of the reason inflation and corruption cannot manifest in crypto and bitcoin network in particular, because such has been programmed with the maximum supply it had.

[Slimzeee]

Some time ago, this question popped into my head, but since there was no definitive answer to what I cannot control, I had to let it go.

When I think about it, we are in the 21st century, right? Hackers are everywhere. What if someone, just one person, is good enough to exploit a tiny loophole?

At this point, I’ll limit my "what ifs," since every transaction is recorded on the blockchain. I just have to trust its integrity. And because 21 million is not yet in circulation, I have to trust the system

[d5000]

The scenario was already reality at least once. MtGox got hacked (or robbed by an employee) in 2011 already (before it was sold to Mark Karpeles actually), but they've hidden that fact until they went bankrupt in 2014 because they thought there would be a way to re-buy them with trading bots, this failed miserably. If I remember correctly there were thus around 600,000 "additional" GoxBTC shown in the exchange's user balances and order books. The Bitcoin trading volume wasn't as big at that time as today, so these additional BTC probably had some influence on the market.

There may be a scenario where large tradfi institutions are making tons of fees from volume trades of BTC derivatives that never hit the blockchain, and they simply use BTC as a settlement layer occasionally for 10Q/10K filings.

I think the incentives do not really align in that direction. Layer-2s are very cheap fee-wise, and once they become really easy to use (I expect that to be the case when technologies like Ark and sidechains reach maturity, because LN unfortunately has some "conceptual" weaknesses) then they will compete directly with Binance Pay, Coinbase and friends. The money which could be made from fees would then probably not be very important, with the exception of trading fees, because trading is a technology where centralized entities will always have an edge compared to DEXes due to their speed / efficiency.

Layer-2s are easy to audit if they're blockchain based (almost as easy as Bitcoin), so the banks and TradFi institutions would need to offer something to attract users. So they would need to build up trust with credible audits.

This would of course not mean that something like MtGox could not happen again, because there are still loopholes, but it would be probably temporary and not by a large amount.

A technique which still wasn't mentioned is Bitcoin-based stablecoins without Bitcoin backing. Think of Dai but pegged to Bitcoin. This was already tried out by BitShares in 2015 or so, called BitBTC, but failed to get traction and is now dead, I don't know if there have been other attempts. This is indeed a way to increase the supply of Bitcoin-based "money tokens" in a completely legitimate way. But it's auditable like any "layer 2" would be, and the supply is also limited by incentives, if it gets too high then the token will probably collapse without taking Bitcoin down with it. These tokens are not BItcoin, they are speculative CFD contracts.

Thus I would say that the very popular NYKNYB phrase can be changed even to "Not your [Bitcoin] keys, not Bitcoin".

[ChiBitCTy]

So, what you are asking is not that will there be more then 21M "real" BTC but how would we know if bank A says they have 1M BTC and bank B says they have 1MBTC and so on other then a complete audit of everything they have how can we know that they really have it?

If that is what you are looking for then the answer is well...we will not without them providing a full audit.

Financial institutions are supposed to be audited by professionals who have their work supervised and checked by others. But, as we saw in 2008 and 2001 and all through the 1980s and early 1990s and probably before that people lie.

That is what is great about BTC You can hold your own.

Not your keys....not your coins....

-Dave

If it's regulated by the SEC, this all has to be disclosed.  ETFs are, and it's fully disclosed as required by law.  That can't be hidden.  HOWEVER..the new fund in town is the CIT (collateral investment trust) or also known as CIF (collective investment fund).  These funds have now surpassed Mutual Funds as the top fund type inside 401k's.   Currently they can only be purchased through employer sponsored retirement plans (401k's, 457'bs and look to be available in 403b's very soon).  

I have a real issue with them, and work with them daily, so I know them well enough to know I don't feel warm and fuzzy about them.  Since they are NOT overseen by the SEC, which means less regulation and less transparency required.  Their Morninstar Whitepapers look very different than those of Mutual Funds and ETFs.   I know the plan I work with, the CIT's are managed by the State Comptroller.  

If they hold any btc assets or exposure to bitcoin ETFs or "cryptocurrency" stocks like CON , errr "COIN" (conbase, I mean coinbase)..who fn knows.  Not cool in my book.

Here's more info on them - https://www.investopedia.com/terms/c/collective-investment-fund.asp

Edit: Im not sure how ETP's (Euros version of ETFs) disclosure works, but would love it if anyone could provide some clarity

[Catenaccio]

Thus I would say that the very popular NYKNYB phrase can be changed even to "Not your [Bitcoin] keys, not Bitcoin".

"Not your keys, not your coins" works well in the past, now and in future. When people know that this saying works, they will know about very big risk if they invest money in Bitcoin without access to private keys. If their investment choice does not give them private keys, they are doing risky invesment practice and Bitcoin storage practice.

Bitcoin Q&A: Not your Keys, Not your Coins. It's a video and takes time for listening but with this importance, newbies if want to learn can listen it.

If they want to save listening time, they can read this one.
Reminder: do not keep your money in online accounts.

If it's regulated by the SEC, this all has to be disclosed.  ETFs are, and it's fully disclosed as required by law.  That can't be hidden.  

There are always chances of abuse and if it happened with traditional banks, it can happen with ETFs. With my investment money, I don't want to trust any company to use my money for buying bitcoin, and give me something equivalent in return. I want bitcoin, private key to fully control my bitcoin, and don't want to trust any company for this vital task (bitcoin management with my money and bitcoin). If I trust them, I don't actually have bitcoin, and my trust can mean nothing for my Bitcoin fund safety.

[d5000]

"Not your keys, not your coins" works well in the past, now and in future.

Yep, the original slogan is cool, too. But have you read what I wrote?

What I meant was, in line with the topic of this thread: if you purchase something labeled as "BTC" and you don't get a private key for it, then it's not a Bitcoin, but something else

It may be some IOU from a CEX or another bank-like intermediary entity doing fractional-reserve banking, or a wBTC-style wrapped token where the backing Bitcoins in theory can be stolen, etc.  You have no guarantee that it's 1/21000000th of the Bitcoins in circulation until you get a private key and the BTC are "sitting" there.

[BenCodie]

The existence of derivatives and ETFs theoretically mean that the 21,000,000 limit has already been breached. It is a similar story than gold, more than the physical supply is actually traded or owned due to instruments (on paper) though does that not mean that anything that is not on-chain is legitimate supply. It's only legitimate for as long as the systems allowing derivatives/etfs continue to trade in line with Bitcoin's price. One day, they might be two different things.

[nutildah]

A technique which still wasn't mentioned is Bitcoin-based stablecoins without Bitcoin backing. Think of Dai but pegged to Bitcoin. This was already tried out by BitShares in 2015 or so, called BitBTC, but failed to get traction and is now dead, I don't know if there have been other attempts.

There were a couple of attempts on Counterparty but they weren't very successful:

XBTC
BITCOINEX

The reasoning for them was it's not super easy to conduct BTC trades for Counterparty tokens on the platform DEX -- it requires that both parties be online at the time of the transaction to approve signatures. While the DEX itself works great for tokens, it doesn't escrow BTC very well, or is perhaps overly-secure about it.

I know that in the case of XBTC, everyone was given a chance to cash out their token for BTC... BITCOINEX's present distribution looks a little bit more of a mess.



Anyway, just a random anecdote in the history of Bitcoin.

[ABCbits]

But with more banks, institutions, and CEXs trying to custody the BTC and creating ETFs, options, and perhaps other derivatives in the future, how can we be sure there won't be an "infinite" supply of these synthetic "shares" of BTC?

It's one of reason why phrase "Don't trust, verify" sometimes mentioned on Bitcoin and cryptocurrency community. Although it's hard to that you usually rely on data they share and result of audit done by 3rd party.

You can't tell people they shouldn't buy BTC ETFs because not everyone is interested in self custody. Not everyone is interested in self-custody because to some, that's the quickest way to lose their coins. Image telling a millionaire to start learning how to keep their coins safe though all his business life, he had had to depend on banks and other entities to secure his money. That's the essence of the ETF.

FWIW if someone cares about maximizing profit, he would learn that BTC ETF have higher fee compared with exchange trading and withdraw fee. That means he'll look for other ways, including self-custodial.

[Cryptohygenic]

Some time ago, this question popped into my head, but since there was no definitive answer to what I cannot control, I had to let it go.

There is a saying that a questionnaire does not get lost. So if you have anything bothering your thoughts or even as being skeptic with your instincts as long as it has to do with bitcoin where you have an asset invested on, don't fail to ask questions clarity.
You have all the right to justify your emotions with any single action.
That also will broaden your paths in your journey of investing in bitcoin.

[hero_the_bossman]

Some time ago, this question popped into my head, but since there was no definitive answer to what I cannot control, I had to let it go.

There is a saying that a questionnaire does not get lost. So if you have anything bothering your thoughts or even as being skeptic with your instincts as long as it has to do with bitcoin where you have an asset invested on, don't fail to ask questions clarity.
You have all the right to justify your emotions with any single action.
That also will broaden your paths in your journey of investing in bitcoin.

Analysis and curiosity should be the pushers for knowledge.

Emotions - not so much

[Ruhila7]

Sorry for clickbaity title, obviously there will only be 21M BTC.

But with more banks, institutions, and CEXs trying to custody the BTC and creating ETFs, options, and perhaps other derivatives in the future, how can we be sure there won't be an "infinite" supply of these synthetic "shares" of BTC?

I have a feeling the mass adopters will ultimately trust big banks to custody their BTC for them especially if some yield bearing instruments become popular. I fear the banks may engage in shady behavior to manipulate prices further.

Thoughts?

I only became aware of what synthetic shares are by studying how GME investors have explained how the stock markets actually work. This is all related to BTC in the sense that I'm trying to see how to play $GME as it transitions to MSTR 2.0, but the synthetic shares for GME is interesting....wondering if this is possible for BTC and IBIT etc.

That's for sure a clickbait. You know contract address where it is locked supply for 21 million and it cannot be increased or decreased because it can only decreases by sending to null address.

[Cricktor]

You know contract address where it is locked supply for 21 million and it cannot be increased or decreased because it can only decreases by sending to null address.

And that's for sure complete nonsense with respect to Bitcoin. Spend some time here https://learnmeabitcoin.com to learn how Bitcoin actually works.