Posted 3 years ago | by Ben Armstrong
Does Supply Matter? 3 Million Bitcoin May Answer the Question
Depending on when this article is being read, the 18 millionth Bitcoin (BTC) may have already been minted. The milestone has been making waves in the crypto community, and there are many questions about price and the future of the hard cap of 21 million BTC coming to the surface.
So far, the 18 millionth BTC hasn't done much to influence the price of the world's most valuable token. It is trading around $8,000, which is both high and low, depending on who you ask.
Some people may think that because it took just a decade to create nearly all the BTC that are allowed under the current architecture, the last 3 million will be coming in the next few years. In actuality, we will likely be waiting until the mid 22nd century to see that last BTC minted.
Bitcoin Supply is Growing
Despite the fact that BTC architecture will make it take a lot longer for the last 3 million BTC to be minted, many are weighing in on the eventual last BTC in existence.
Angela Walch, who is a research fellow at the University College London Centre for Blockchain Technologies, told media that:
“All of your assumptions about incentives, risk and value go out the window...please take the blinders off and stop assuming that everything will still work well once everything goes to a pure transaction-fees system as opposed to block (subsidy).”
Ms. Walch is of course referring to the fact that BTC miners are paid to operate the network via newly created BTC tokens. Once the last BTC is minted, the idea is that there will be no incentive to operate the BTC blockchain.
In 100+ years...
Does Supply Matter?
Bitcoin is often compared to gold, which has a relatively fixed supply.
Most of the gold that can be mined at current prices has already been pulled out of the ground, though China, Russia, Australia, and the USA still manage to mine a chunk of the yellow metal every year.
The question that comes up is one of price, and its relationship with supply.
One look at how gold supply rises steadily over time when compared to its price which moves around violently should be enough to show that demand matters a whole lot more than supply, at least as it concerns price, which will probably hold true for BTC as well.
New Money for the Digital Age
Paul Brody, the global innovation leader for audit firm Ernst & Young, seems to understand what really matters.
“If bitcoin were to become a substantial part of the global monetary system, we would need to address (the hard supply cap) because a lot of economists agree deflationary systems are not necessarily the best thing.”
The real question is why Mr. Brody is taking on that position, as it likely has something to do with Modern Monetary Theory (MMT), and central banking.
'Deflationary Systems' are almost universally hated by modern economists, largely because they are nearly impossible to reconcile with the banking system that has grown out of the fiat currency era that began in 1971.