Previous articles on Learn Crypto have explained the role played by different participants. One of the key participants are Miners who are crucial to the issue of scarcity as they generate new bitcoin – also known as issuance.
It is crucial that issuance is predictable and smooth, and again data can prove this process is happening as expected, enabling users and investors to trust that Bitcoin is working as advertised.
Notice the step changes in the graph above; these four year phases are known as halvings. At intervals of 210,000 blocks the reward a miner receives for mining a new block halves. It began at 50 BTC and following four successful havlings – the latest on May 22nd, 2020 – it is currently set at 6.25 BTC.
If the issuance works as planned then maximum total supply will be reached as expected and Bitcoin can be expected to achieve digital scarcity. At that point, miners will only receive rewards from transaction fees, as there will be no new blocks to mine.
There are however, other factors you should consider in assessing scarcity:
Lost Coins
How many coins are lost and therefore unspendable? This is impossible to know with certainty, but estimates put the figure at around 20% of supply. This means the true measure of Bitcoin scarcity i.e spendable coins, is probably only 80% of those known to have been mined.
Satoshi’s Coins
You might also argue that the 1,000,000 bitcoin estimated to have been mined by Satoshi are unspendable, and should be discounted from supply measures. This however, is subject; just because those coins haven’t moved, doesn’t they may not in the future.
Fungibility
There have already been instances where certain Bitcoin addresses have been blacklisted. The U.S. Treasury Department’s Office of Foreign Asset Control ,has listed specific addresses connected to criminal indictments which essentially cordon-off these from use. They are tied to hacking or scams from North Korea, Iran and China, but could be a sign of things to come. Should this approach broaden, those addresses and any funds held could only be spent at great risk.
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