Why conviction is Bitcoin's real scarcity not 21 million.

[CTO114]

From one side of the coin, one can see Bitcoin's scarcity from supply caps, but on the other side of the coin, psychologically Bitcoin's true scarcity is found in long term holders with conviction.

Various people have held Bitcoin at different stages; when it was $1, $100 and $1000, still very few kept it.

Young can't help but wonder why? Well it's simple because the market transferred Bitcoin from the impatient to the patient through volatility trends.

You can them agree that Bitcoin is more of a psychological filter than a technological filter.

The so called protocol tests; fear, time preference, emotional stability and belief under uncertainty.

A good explanation to why a large amount of Bitcoin concentrates into strong hands in the long run.

[FP91G]

Mining the first Bitcoins was very cheap, so miners bought pizza for 10,000 Bitcoins and distributed their coins to various faucets.
After the advent of ASICs, the cost of mining began to take shape, and now each Bitcoin has its own mining price.
People won't be able to hold onto their coins for long anyway and will sell them due to life circumstances.

[Smartprofit]

In my opinion, people use the HODL strategy not only because of their personality traits (i.e., their willingness to stick to their beliefs at any cost). Bitcoin's technical sophistication is also crucial. Free people need a financial asset that is under their absolute control.🙋

Satoshi Nakamoto solved the problem by creating an asset that doesn't require intermediaries. This, in my opinion, is Bitcoin's technological uniqueness. Moreover, Bitcoin has demonstrated stability and reliability since its inception. This is highly valued in the financial sector!

At the same time, I completely agree with you that the actions of Bitcoin maximalists lead to a decrease in the supply of Bitcoin on the market. And as economic theory shows, a decrease in supply always leads to an increase in the price of a commodity.

Bitcoin maximalists who use the HODL strategy, on the one hand, constantly reduce the supply of coins (by holding them and not selling), and on the other, constantly buy them during bear markets.  As a result, they manage to maximize their profits (while the “weak hands” suffer losses).💁

[Ambatman]

I believe codes and number are more trust worthy than humans reactions
Holding holds until a price that beats your limit even if you don't sell all
What am saying is as prices increases Bitcoin would change hands and vice versa.
There's difference between me keeping 10 bananas out of 12 and there existing only 2 banana

[Aymoons]

In the long term, governments and institutions will adopt Bitcoin with the intent to hold for the long term and this will dramatically increase scarcity. We already have Microstrategy accumulating large sums of Bitcoin (840,000 Bitcoin right now), and in the long term this alone will have a strong effect on scarcity when the price of Bitcoin is over 1 million per coin and with barely any Bitcoin left to mine.

[Mate2237]

You raised a very important point here and I see reason with it. Because looking critically at how Bitcoin has become today the challenge has always and will always be personal conviction. Because for anyone to fully buy into the idea behind Bitcoin such a person mousy first believe and have some levels of trust which is eventually bring about the needed conviction that will help the investor to accept Bitcoin.


So invariably speaking even though Bitcoin is scars due to it limited nature it really scarcity lies with individuals and personal believe which will be rooted in the word Combinations without which nobody will venture into Bitcoin.

[Alpha Marine]

You forget that something gives Bitcoin that conviction. Why don't we see those convivtions on other coins? Why does about 60% of the money in the market go to Bitcoin, even though there are millions of other projects? It's because of the code, which makes up the hard cap and more.
The success of Bitcoin isn't due to just one thing. It is a combination of all its features. People don't trust Bitcoin simply because it is the first coin, or because it is decentralised or simply because the identity of its creator(s) is not known. It is everything put together, and everything links back to the code and how the network is set up.
Bitcoin's hard cap may be one of the reasons there is a strong conviction for Bitcoin, but that is only one of the reasons; there are many more. 

[SquirrelJulietGarden]

From one side of the coin, one can see Bitcoin's scarcity from supply caps, but on the other side of the coin, psychologically Bitcoin's true scarcity is found in long term holders with conviction.

A good explanation to why a large amount of Bitcoin concentrates into strong hands in the long run.

In total supply, bitcoin is already scarce with only 21 million bitcoins totally but Bitcoin scarcity has been affected by lost bitcoins that impacting the actual available bitcoins for circulation. It's advantage for people who are early Bitcoiners, actually owned bitcoin from either mining or purchasing but there is another important condition, they are still holding their bitcoins now.

Because with time, more people lost their bitcoins from losing private keys, losing wallet backups, passing away without proper inheritance for their family members, while demand will become bigger with time as consequence of Bitcoin adoption growth.

You can estimate lost bitcoins from this HODL waves chart.
https://www.bitcoinmagazinepro.com/charts/hodl-waves/

Lost Bitcoin: 3.7 million Bitcoin are probably gone forever.

[d5000]

Bitcoin is more of a psychological filter than a technological filter. [...] The so called protocol tests; fear, time preference, emotional stability and belief under uncertainty.

This is actually an interesting idea. However, I don't think it's currently clear if this is currently a real tendency or if it is still a bit of wishful thinking or a possible mechanism for the future. The reason I'm writing this is because those using Bitcoin for short term speculation and "trading" are still a majority. DCA and hodling in general seems to grow, but very slowly. And in all bull markets, some old hodlers sell their coins. Who would blame it, if they can fulfill an old dream selling their BTC?

I think eventually there could come a virtuous cycle into play:

- Bitcoin's volatility lowers
- Bear market lows become higher in comparison to bull market highs - e.g. in 2018 the $3000 low was 15% of the previous $20000 high, while in 2022 the $15k low was 22% of the previous $69k high.
- This increases the confidence to buy in bear markets and accumulate, to benefit from the long term trend. It also prevents people to sell too fast.
- Traders lose, they have less volatility to benefit from
- HODLer ratio grows, trader and weak hand ratio decrease
- volatility lowers, because traders (above all leveraged positions) and weak hands create volatility.

I think this may be partly already happening, but it's not a decisive trend still. Because currently we have still many leveraged traders there who constantly try to liquidate the contrary position (bulls vs. bears) and still are successful, like we saw in the 60k dump.

[m2017]

From one side of the coin, one can see Bitcoin's scarcity from supply caps, but on the other side of the coin, psychologically Bitcoin's true scarcity is found in long term holders with conviction.

In confidence that "tomorrow" these bitcoins will be able to be sold to the next buyers\holders.

Young can't help but wonder why? Well it's simple because the market transferred Bitcoin from the impatient to the patient through volatility trends.

Who is this? Shouldn't you have clarified or provided a reference before citing someone's statements?

A good explanation to why a large amount of Bitcoin concentrates into strong hands in the long run.

It turns out that bitcoin has a dual limit: on one hand, there's a limited supply, and on the other, there are holders who hold bitcoin. This ultimately creates a situation where only a small amount of bitcoin remains in free circulation (and access) on the market, and even fewer are circulating and involved in buying and selling. Therefore, bitcoin shortage is not only technical (21 million) but also social (big holders like Strategy and Blackrock create a shortage).

[EluguHcman]

From one side of the coin, one can see Bitcoin's scarcity from supply caps, but on the other side of the coin, psychologically Bitcoin's true scarcity is found in long term holders with conviction.

Apparently the scarcity of Bitcoin is pegged on the 21 million supplies capitalization in which it is limited.
The essence of the scarcity is its wage as a potential long term value to regulate availability of the coins not to be excessive.

The psychological term is fostered on the conviction of enthusiasts according to Speculations and the markets volatilities derivation which are literally uncertainty.
Therefore, Bitcoin is aimed to be a long term valuable asset based on the contrast of the market cap and the adoption rate.

[Catenaccio]

Apparently the scarcity of Bitcoin is pegged on the 21 million supplies capitalization in which it is limited.
The essence of the scarcity is its wage as a potential long term value to regulate availability of the coins not to be excessive.

The psychological term is fostered on the conviction of enthusiasts according to Speculations and the markets volatilities derivation which are literally uncertainty.
Therefore, Bitcoin is aimed to be a long term valuable asset based on the contrast of the market cap and the adoption rate.

The total supply of Bitcoin is 21M that is very well known and except people have never known about Bitcoin, with most of the others, it's not a strange information with them.

It's only people feel interesting after reading about Bitcoin total supply, understand about the bitcoin scarcity and how they feel good by investing money in Bitcoin or ignoring Bitcoin and continuing with traditional assets or taking risk with altcoins and shitcoins.

The total supply is not the only reason why Bitcoin has very high price like now and higher prices in the future. Its value decides the price over time, and value comes from Bitcoin technology, technical specifications as well as other factors like adoption growth, and increasing huge demand over time.