Bitcoin does not have a fixed supply of 21M
229 sats \ 6 comments \ @husseinb 18 Jan 2023 bitcoin
Sure the Bitcoin protocol defines a fixed limit of 21M bitcoins but Bitcoin's circulating supply has a number of deflationary pressures such as:
  • Loss of keys - as adoption of Bitcoins grows we can only expect a increase in the number of Bitcoins lost by new adopters
  • Death of the private key holders with no beneficiary management. I expect the number of Bitcoins that will be lost due to a lack of beneficiary management will peak over the next 5 years before better awareness of and solutions for beneficiary management take hold.
  • State seizure of Bitcoins from criminal proceeds including tainting of coins. States have seized Bitcoin from criminal proceeds and while some of these can return to circulation those coins that have been tainted by on-chain analysis firms will be more difficult to re-introduce albeit not impossible.
Some estimates put the total number of Bitcoins that have been removed from circulation at around the 3M mark. If we assume a similar rate of removal in this decade we can expect about 5M bitcoins to be removed from circulation by 2030.
I'd love to hear opinions on this subject because I don't think it is discussed enough and the future ramifications for Bitcoin are quite significant.
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53 sats \ 0 replies \ @cointastical 18 Jan 2023
If we assume a similar rate of removal in this decade
You can't assume that.
Someone with one bitcoin is a LOT more careful with that today at $20K than they might have been when one bitcoin was $20, or $0.20.
Also, the methods for key management are much better today. And thus losses because the keys weren't backed up, or otherwise able to be recovered, will be much smaller.
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15 sats \ 0 replies \ @DarthCoin 18 Jan 2023
So what?
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10 sats \ 0 replies \ @TomK 18 Jan 2023
You're right. Therefore BTC soon will become the first deflationary money that ever existed. This will back tech adoption and lead to a more stable economy. Look at the boom-bust-cycles we are in now. Vola is growing and moving to the streets everywhere.
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0 sats \ 0 replies \ @jerry 18 Jan 2023
And what's the question?
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0 sats \ 1 reply \ @Zepasta 18 Jan 2023
deleted by author
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20 sats \ 0 replies \ @wispy 18 Jan 2023
Every bitcoin you "have" in your wallet is actually an UTXO (Unspent Transaction Output, ie. a number) locked with your private key (I'm simplifying for the sake of the point). When a malicious entity - such as a state, exchange, wasabi wallet, etc- doesn't like someone, instructs to not accept that UTXO, so, your bitcoins would be "tainted" and not accepted. They cannot stop you from sending them your sats, but just act as if no transfer took place. If it's a wallet-level blockage you actually couldn't stream the transaction. The solution would be a combination of mixing, swapping, etc, I guess. DYOR, I'm not 100% sure I got it right all the points, it's an entry.
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