Bitcoin Is Digital Scarcity
Why 0.1 Bitcoin is a lot today and into the future.
The following article is not financial advice but rather an exploration into Bitcoin’s both real and perceived scarcity.
I once heard that the best way to explain Bitcoin to any interested and inquiring family members at a holiday meal is to simply say that:
“It’s the first time in history that we have been able to own something digitally that can’t be replicated and is part of a finite supply.”
Seems simple, but it’s a really good ‘explain it to me like I’m five’ for Bitcoin. If it resonates, please share it. It’s not my quote or idea and I hope it helps to better explain Bitcoin. I share this as an intro to this article’s topic which is Bitcoin scarcity and how having what’s perceived as a little (0.1 Bitcoin) is not only a lot today but will continue to be moving forward.
I recently published an episode on my podcast More Than Blockchain entitled “Bitcoin Is So Scarce That 0.1 Is A Lot” and wanted to share that episode’s napkin math here.
Bitcoin, and this may be redundant but nevertheless worth sharing, has a finite amount of only 21,000,000 or 21M. This is how Satoshi, Bitcoin’s pseudonymous creator or creators, programmed it to be and that’s how it is.
Within the Bitcoin community, there are ample memes about how there are only three certainties in life: death, taxes and 21M Bitcoin. (The image below came up from a google search within a split second.)
To understand Bitcoin’s scarcity, let’s first unpack how much Bitcoin is currently in circulation out of the total 21M. For the purposes of the podcast episode as well as this article, I’ve rounded the current circulating amount of roughly 19,279, 710 Bitcoin down to 19,200,000 or 19.2M. This data is from CoinMarketCap.com which provides a global average Bitcoin amount that is a good reflection of its moment to moment circulating supply.
Now that we’ve rounded down the amount of Bitcoin in circulation to 19.2M this means that there are only 1.8M more to mine. The 19.2M Bitcoins in circulation represents roughly 91% of the total amount of 21M Bitcoins and the 1.8M Bitcoins that have yet to be mined represents roughly 9% of all Bitcoins. For a quick lesson on Bitcoin mining click this link and for a more in depth look into Bitcoin mining click this link.
Okay, so there are 19.2M Bitcoins in circulation and 1.8M Bitcoins that have yet to be mined and added into the market to be bought and sold. Knowing this, let’s look at three hypothetical thought experiments (HTEs) to better understand Bitcoin’s scarcity and why 0.1 Bitcoin is not only a lot today but will continue to be a lot as we move into the future.
The first HTE looks at the amount of Bitcoin each person in the world would have if all 21M Bitcoins were equally divided among the world’s total estimated population of 8 billion or 8B.
DISCLAIMER: Before we continue I want you to know that I realize that all three of the HTEs from the podcast that I’ll mention in this article are fraught with wildly unrealistic working assumptions. To think that all 8B people, including infants and the elderly, could somehow have an equal share of Bitcoin is just preposterous. Bitcoin, and crypto in general, isn’t currently the easiest thing to acquire nor properly store. It’s even made more ridiculous when we take into account how many millions of people globally are without reliable access to electricity not to mention the internet. Yet, let’s live in a fantasy world for the sake of the three HTEs in this article and focus on the napkin math.
To figure out how much Bitcoin 8B people would receive if all 21M Bitcoin were mined, let’s look at the following:
21,000,000 Bitcoin / 8,000,000,000 People = 0.002625 Bitcoin per person
To put this in perspective, how far away is 0.002625 Bitcoin from the focus of this article which is 0.1 Bitcoin?
0.1 Bitcoin / 0.002625 Bitcoin = 38.0952381* → Let’s round this to 38
0.1 Bitcoin is roughly 38Xs* greater than 0.002625 Bitcoin which means that in a world where everyone receives an equal share of the current Bitcoin circulating supply then owning 0.1 Bitcoin would be equivalent to that of roughly 38 other people’s Bitcoin holdings.
*In the podcast, I say that it’s 39X greater when it’s actually 38X greater.
The second HTE looks at the amount of Bitcoin each person in the world would have if the current circulating amount that we rounded down to 19.2M was equally divided among the world’s total estimated population of 8B.
19,200,000 Bitcoin / 8,000,000,000 People = 0.0024 Bitcoin per person
Let’s put 0.0024 Bitcoin in context. Returning to the focus of this article which is 0.1 Bitcoin, how far away is 0.0024 Bitcoin from 0.1 Bitcoin?
0.1 Bitcoin / 0.0024 Bitcoin = 41.6666667 → Let’s round up to 42
0.1 Bitcoin is roughly 42Xs greater than 0.0024 Bitcoin which means that in a world where everyone receives an equal share of the current Bitcoin circulating supply then owning 0.1 Bitcoin would be equivalent to that of roughly 42 other people’s Bitcoin holdings.
Now that we’ve looked at how much Bitcoin everyone in the world would have if all 8B people each received an equal share of the total amount of Bitcoin (21M) and the current circulating supply (19.2M), let’s look at how much Bitcoin every person in the world would have if we divided the 1.8M Bitcoins that have yet to be mined by the estimated world population of 8B.
This third HTE is even more ridiculous than the first and second but serves to show just how scarce 0.1 Bitcoin would be if all of the 19.2M Bitcoin currently in circulation were never to be sold. Something that is highly unlikely but let’s analyze it nonetheless:
1,800,000 / 8,000,000,000 = 0.000225 and we’ll round this to 0.0002
To put 0.0002 Bitcoin into context, how far away is it from 0.1 Bitcoin?
0.1 Bitcoin / 0.0002 Bitcoin = 500
0.1 Bitcoin is roughly 500X greater than 0.0002 which means that in a world where everyone receives an equal share of the yet to be mined Bitcoin, then owning 0.1 Bitcoin would be equivalent to that of 500 other people.
If you listen to the podcast episode, which I encourage you to do, you’ll see that after I finish this third HTE, I start to talk about how even today 0.1 Bitcoin is not attainable for a majority of the people on the planet. For some, it might be pennies on the dollar but for most people it’s a large amount of money to invest into what is still seen by many as a speculative asset. At the time of the episode’s recording, Bitcoin was hovering around $17k which means that a 0.1 Bitcoin would’ve been roughly worth around $1,700. $1,700, as I’ve just said and reiterate on the podcast episode, is either a lot or a little amount of money depending upon your personal financial standing. I just think it’s prudent to call out that for many people in the world, having 0.1 Bitcoin may just never be feasible.
In the podcast episode, I intentionally leave out other factors that will lead to 0.1 Bitcoin being a lot, so as to keep the episode focused around the simple idea that 0.1 Bitcoin is an amount that should not to be underestimated. However, the internet via thoughtful YouTube comments, reminded me that my analysis was lacking some fairly large factors that further cement 0.1 Bitcoin as not only a lot today but a lot into the future.
Lost Keys / Lost Bitcoins
As the saying goes “not your keys, not your coins”, and it’s estimated that there are millions of Bitcoins that have been lost due to owner negligence and not keeping safe one’s seed phrase to be able to recover stored Bitcoin in the event that one forgets their password to their cold/hot wallet. For more information on how this happens, click here. To disregard the lost Bitcoin is to not properly analyze the value and scarcity, both present and future, of 0.1 Bitcoin.
Whales / The Wealthy
One of the other “elephants in the room” are actually whales or people/companies who own hundreds or thousands of Bitcoins which impacts all three of the HTEs from this article. Beyond the Bitcoin whales is the wealthy and millionaire class whose overnight future interest in Bitcoin could see prices skyrocket, as there are more millionaires in the world than full Bitcoins to go around.
Fiat Currency Collapse and Devaluation
The third factor that I think will lead to 0.1 Bitcoin being highly rare to have is that billions of people on the planet work for currencies that are either currently or will in the future experience devaluation. Since the pandemic, many countries have seen their currencies lose value at an alarming rate. If you’re earning a currency that is prone to or is experiencing devaluation, it will make it that much harder to acquire 0.1 Bitcoin as other priorities besides investing will likely take center stage.
When you take into account these 3 extra factors, owning 0.1 Bitcoin starts to look not only like a lot today but a lot into the future.
At the time of the podcast episode’s recording, Bitcoin was hovering around $17k which meant the value of 0.1 Bitcoin would’ve been $1,700. To end this article, I want to share with you a YouTube comment that sums up investing into and/or just watching the Bitcoin market.
At the time of the publishing of this article, Bitcoin is right around $24k or $2,400 for 0.1 Bitcoin. With Bitcoin, no matter how late you think you are to the party, you’re always somehow fashionably early.
If you enjoyed this analysis, please consider checking out other Bitcoin episodes from my podcast More Than Blockchain:
(This article’s inspiration) Bitcoin Is So Scarce That 0.1 Is A Lot — YouTube, Spotify & Apple
NIHOWDY, A Bitcoin Healthcare Startup With James Wong — YouTube, Spotify & Apple
Bitcoin, The Institutions Are Coming For You! — YouTube, Spotify & Apple
Bitcoin Children’s Books & Card Game With Scott Sibley of SHAMORY — YouTube, Spotify & Apple
Bitcoin Micropayments on Hey Apollo With Thomas Fahrer — YouTube, Spotify & Apple
Texas Bitcoin Mining With George Pate — YouTube, Spotify & Apple
$1M Bitcoin, US Banking Crisis & Is The Dollar Losing Global Power — YouTube
Bitcoin Investing In 2023 — A Lonely Pursuit — YouTube
Is Bitcoin The Answer To Currency Devaluation In The Americas? — YouTube
Why Bitcoin Haters Are Buy Signals — YouTube, Spotify & Apple
Why You Don’t Own Bitcoin — YouTube , Spotify & Apple
Will This Signal Bitcoin’s Bottom? — Youtube, Spotify & Apple
Bitcoin Maximalists Are Selling Real Estate To Buy More Bitcoin — YouTube, Spotify & Apple
Yes, 1 Bitcoin Could Be Worth 1 Million Dollars In 10 Years — YouTube, Spotify & Apple
Is Bitcoin The New 401K For Millennials — YouTube , Spotify & Apple
Future Hedge | Why I Invest In Bitcoin — YouTube , Spotify & Apple
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