Bitcoin, like gold, cannot simply be created arbitrarily, it is limited and finite supply to a max of 21 million Bitcoins, ever. Gold’s supply has historically increased at around 2% per year. Bitcoin’s supply will increase less than 2% starting at the 2020 halving, and will go to less than 1% a year after the 2024 halving. Bitcoin’s supply will end when the last Bitcoin is mined approx in the year 2140. Gold might be continue to be found through asteroid mining🙂
” 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” — Nakamoto
Bitcoin the scarce digital object. Scarce like silver & gold, but can be sent over the internet, radio or satellite; allows fractional ownership and rapid settlements; possesses a strong liquidity; runs on a secure ledger architecture.
“What do antiques, time, and gold have in common? They are costly, due either to their original cost or the improbability of their history, and it is difficult to spoof this costliness. Precious metals and collectibles have an unforgeable scarcity due to the costliness of their creation. This once provided money the value of which was largely independent of any trusted third party. ” — Szabo
Bitcoin’s costliness, caused by its costs of electricity to produce new Bitcoins. Gold and Bitcoin are different from consumable commodities like copper, zinc, nickel, brass, because they have high stock-to-flow (SF) ratio.
“For any consumable commodity [..] doubling of output will dwarf any existing stockpiles, bringing the price crashing down and hurting the holders. For gold, a price spike that causes a doubling of annual production will be insignificant, increasing stockpiles by 3% rather than 1.5%. — Ammous
A consistently low rate of supply of Bitcoin, like gold, is the fundamental reason it will maintain its monetary role also in future.
“The high stock-to-flow ratio of gold makes it the commodity with the lowest price elasticity of supply. The existing stockpiles of Bitcoin in 2017 were around 25 times larger than the new coins produced in 2017. This is still less than half of the ratio for gold, but around the year 2022, Bitcoin’s stock-to-flow ratio will overtake that of gold” — Ammous
Gold has the highest SF 62 (current market value $8.5trn), it takes 62 years of production to get current gold stock. Silver is second with SF 22 (current market value $308bn). This high SF makes them monetary goods.
SF = stock (total supply) / flow (yearly produce)
Stock is the size of the existing stockpiles or reserve (total Bitcoin): 21 million
Flow is the yearly production/ creation: 657,000 (until next reward halving in 2020)
>> Bitcoin has (2019) a stock of 17.9 million coins and supply of 0.7m/yr = SF 25 (current market value $181bn)
Scarcity, as measured by SF, and directly drives value.
The Bitcoin halving will have a big impact on SF, indicated with the dark blue dot, the next halving in 2020 will double to the SF to 50, very close to gold (SF 62). The predicted market value for Bitcoin after 2020 halving is $1trn, which translates in a price of $55,000.
Some perspective:
>> Maximum 21 million Bitcoins in the world
>> Approximately 34 million Millionaires in the world
>> World’s money and markets:
Sources: PlanB, Satoshi Nakamoto, Investopia, howmuch, Moonwhale
More information about Irish Tech News and the Business Showcase
FYI the ROI for you is => Irish Tech News now gets over 1.5 million monthly views, and up to 900k monthly unique visitors, from over 160 countries. We have over 860,000 relevant followers on Twitter on our various accounts & were recently described as Ireland’s leading online tech news site and Ireland’s answer to TechCrunch, so we can offer you a good audience!
Since introducing desktop notifications a short time ago, which notify readers directly in their browser of new articles being published, over 16000 people have now signed up to receive them ensuring they are instantly kept up to date on all our latest content. Desktop notifications offer a unique method of serving content directly to verified readers and bypass the issue of content getting lost in people’s crowded news feeds.
Drop us a line if you want to be featured, guest post, suggest a possible interview, or just let us know what you would like to see more of in our future articles. We’re always open to new and interesting suggestions for informative and different articles. Contact us, by email, twitter or whatever social media works for you and hopefully we can share your story too and reach our global audience.
If you would like to have your company featured in the Irish Tech News Business Showcase, get in contact with us at [email protected] or on Twitter: @SimonCocking