85% Bitcoin Mined, Implications as Supply Gets Thinner
Over 17,850,575 Bitcoin have been mined as at this writing meaning 85% of the top cryptocurrency’s expected total supply (21 million) is already in circulation. Though the next Bitcoin reward halving – when the coin reward will decrease from its current 12.5 to 6.25 Bitcoin at every 10-minute block generation time – is not expected until 18 May 2020 (in approximately 290 days), about 524,425 of the 3,149,425 total Bitcoin left to mine would have been mined by then leaving the space with just five years (until 2024) to mine almost 9% of the available 15%.
The time it takes to mine a certain amount of Bitcoin increases exponentially by design. About every four years, the number of Bitcoin generated per block mined gets cut in half. It started in 2009 with 50 BTC per block mined. By 2012, it got cut in half to 25 and 12.5 by 2016.
However, despite the tightening supply while growing in stability, the cryptocurrency’s ecosystem seems to be getting bigger owing to scaling improvements and news of increasing adoption globally. Bitcoin is on the verge of seeing more transactions done on its network in 2019 than any other year in history, according to ShakePay, the Canadian platform that allows users to buy and sell Bitcoin. Also, there is an increase in the number of Bitcoin wallets being created daily (about 41 million in total currently) while approximately four million Bitcoin is assumed to be lost or unspendable thus adding to reduce the effective available supply.
Bitcoin is on pace to do more transactions in 2019 than any other year in history.
When in doubt, zoom out. pic.twitter.com/27eJrfPVt3
— Shakepay – Buy/Sell Bitcoin ?? (@shakepay) July 31, 2019
Implications of reducing Bitcoin supply
The network effects of sidechains (e.g. Blockstream’s Liquid Network) and anonymous Bitcoin transactions using offchain payment protocols (e.g. Lightning Network which is reportedly responsible for up to 10% of total transactions) could continue growing pushing the acceleration in Bitcoin’s chart growth over next years.
The sidechain and offchain channels will also be handy for small payments in the event Bitcoin price rises significantly forcing high transaction fees on users. Their promise to offer faster settlements, Confidential Transactions and sophisticated multisig security will make them a darling of the growing Bitcoin ecosystem.
The market is seeking more powerful Bitcoin miners while their manufacturers such as Bitmain and Canaan work to increase their production capacity. At the same time, as more mining equipment focus on the Bitcoin network, the difficulty rate – which currently stands at over 9T – will rise even faster thus making the mining process harder.
In coming years, Bitcoin holders may not lose their purchasing power as it gets used as a representation of value considering its finite, decentralized and secure nature. With regards to Bitcoin’s relationship with others, there may be a greater shift in the attention of speculators to altcoins as Bitcoin is likely to get more focused on its usage and riskier to lose even as its supply gets thinner.