Bitcoin, with a current value of around $10,200, is often viewed by experts as still being significantly undervalued, mainly due to its limited supply of 21 million coins. This can be attributed to the decentralized nature of Bitcoin’s blockchain technology, which controls the production rate of new coins and ensures scarcity as a fundamental feature of the cryptocurrency.
The “379 million supply not spendable” refers to the estimated number of lost or unused bitcoins that are permanently out of circulation. These bitcoins were mined in the early days of the cryptocurrency when it had little monetary value, and some users may have lost access to their digital wallets or keys, rendering these coins effectively lost.
Despite the volatility in its price, Bitcoin has shown resilience over the years and has garnered significant interest from investors seeking a hedge against economic uncertainties or as a store of value akin to digital gold. The scarcity of Bitcoin plays a crucial role in its valuation, with the principle of supply and demand driving its price movements.
As of September 2020, the total supply of Bitcoin in circulation is approximately 18.5 million coins, with new bitcoins being created through a process known as mining. This involves solving complex mathematical problems to validate transactions on the blockchain and secure the network while receiving rewards in the form of newly minted bitcoins.
The mining process is an essential aspect of the Bitcoin ecosystem, as it incentivizes miners to contribute computing power to maintain the network and process transactions. With a predetermined issuance rate that halves every four years, Bitcoin’s supply is designed to decrease over time until it reaches the maximum limit of 21 million coins.
Investors and analysts often compare Bitcoin to traditional assets like gold, highlighting its scarcity and non-inflationary nature as key selling points. The finite supply of Bitcoin distinguishes it from fiat currencies, which can be printed in unlimited quantities by central banks, potentially leading to inflation and devaluation.
While the current price of Bitcoin may seem high to some observers, proponents argue that its scarcity, utility, and decentralized nature justify its value proposition and long-term potential as a digital asset. The lost or unspendable bitcoins further contribute to the perception of scarcity and can impact the price dynamics of the cryptocurrency.
In conclusion, Bitcoin’s limited supply and the presence of lost coins are factors that contribute to its perceived undervaluation in the market. Understanding the fundamentals of Bitcoin’s blockchain technology, mining process, and supply dynamics can provide insights into its valuation and potential as a digital asset with unique properties and characteristics.
