Last week, Bitcoin's price first broke through the $100,000 mark, and market optimism for cryptocurrencies reached a peak.
Supporters are thrilled and predict that there is still room for price increases. This is because, according to the Bitcoin protocol, the total supply of Bitcoin is strictly limited to 21 million.
However, there are also differing voices in the market. Skeptics of Bitcoin believe it lacks intrinsic value, its price is highly volatile, and it is easily influenced by market sentiment. They worry that if market confidence wanes, Bitcoin's price could experience a significant drop.
Over time, the mining difficulty of Bitcoin has been steadily increasing, and the remaining Bitcoins will become fewer and fewer. Currently, less than 6% of the coins remain 'unmined.' (The Wall Street Journal) Columnist Alexander Osipovich predicts that by 2140, the supply of Bitcoin will cease to increase, and no new Bitcoins will be created.
21 million digital gold: the 'scarcity beauty' of Bitcoin.
In 2009, the Bitcoin genesis block was born. The founder Satoshi Nakamoto's idea was simple: since governments can print money, we should create a currency that cannot be arbitrarily issued. He also cleverly designed a hard cap for Bitcoin and stated:
Avoid the arbitrary inflation risks of centrally managed currencies! The total circulating supply of Bitcoin is limited to 21 million.
The generation of Bitcoin requires 'mining', which involves using computers to solve complex mathematical problems. Every four years, the mining reward is halved until the supply of Bitcoin finally stops increasing. This is expected to occur around 2140, or 116 years from now. Currently, less than 6% of the coins remain 'unmined.'
Although theoretically, the hard cap could be raised by modifying the Bitcoin protocol, due to Bitcoin's decentralized nature, achieving global consensus is extremely difficult. Moreover, raising the hard cap could lead to a drop in Bitcoin's price, harming the interests of current holders. Therefore, most analysts say that the possibility of changing the hard cap is negligible.
According to data from Bitcoin brokerage River, about 1.5 million Bitcoins—worth approximately $150 billion—are irretrievable due to lost keys. Additionally, the 'disappearance' of Bitcoin's founder Satoshi Nakamoto has left nearly 1 million Bitcoins in a dormant state. These losses mean that the circulating supply of Bitcoin in the market may be far below expectations.
River estimates that individual investors hold about 14.7 million Bitcoins, accounting for about 70% of the final supply. Once these investors choose to exit, the market will face tremendous selling pressure, leading to significant fluctuations in Bitcoin's price.
Amidst the 'buying frenzy' for coins, the market landscape is quietly changing.
In recent years, an increasing number of institutions have begun to incorporate Bitcoin into their asset allocations, including publicly listed companies, financial institutions, and governments.
For example, tech giants like MicroStrategy and Tesla have purchased large amounts of Bitcoin, and some exchanges have also issued Bitcoin ETFs, representing investors holding Bitcoin.
Trump has repeatedly expressed his favor for Bitcoin and promised to establish a national Bitcoin reserve. If Trump's plan is implemented, it would mean that the U.S. government would become one of the largest holders of Bitcoin in the world.