Opinion: why the limited issue of Bitcoins does not guarantee To

Inside the crypto community is a very popular theory about the future growth of Bitcoin due to the limited maximum number of coins. Like, on a planet 7.5 billion, and bitcoins will be 21 million. The difference is huge, so sooner or later split the first cryptocurrency begins a serious struggle. Well, a huge demand will give rise to a monstrous growth rate — then all will be good. Tell me why it is not.

The contents

The theory of the growth rate of Bitcoin

This theory actively support Bitcoin maximalists — that is, those who believe in the future only the first cryptocurrency. For example, this publication popular representative of the industry under the name Rhythmtrader.

He proposes to compare a world population of 7.5 billion people with 21 million bitcoins and draw conclusions. This thought he responded to a tweet by co-founder Morgan Creek Digital and host of the podcast Off The Chain Anthony Pompliano. The last reported start taking BTC payments with AT&T and noticed that everyone is trying to hoard bitcoins. This record gained 2.1 7.4 and thousands of retweets, thousands of likes.

Then there is all the difference in the values. The world population is ahead of the maximum number of bitcoins in 357 times. This means that even if you really want, all will not be able to have in your wallet to 1 BTC. In the theoretical equality of people on the planet can count on is that at 0.0028 BTC or the equivalent of 21 dollar at today's exchange rate.

The growth rate of Bitcoin. Source: 2Биткоина

Of course, all of this uses the well-known representatives of the industry to motivate network members to buy BTC. So they essentially increase demand, and indirectly raise the exchange rate of Bitcoin, that is, receive the benefits until the cherished of the Year.

By the way, cryptomnesia Charlie Shrem believes that a person needs to accumulate 5-10 bitcoins. Then in 20 years he will live in a completely different way.

I think this theory has too many flaws. She just is a kind of hopium [“hope” — the hope — in the manner of the word “opium”], that is, a fictional drug that makes hontarov to hold coins and believe in a bright future. To sell savings in any case it is impossible, because then you will find yourself on the side of the road leading to the Town of prosperity and wealth. The way it works.

Below is the arguments that make this theory impossible. At least in my view.

Nobody wants a bitcoin

Generally a difference of 7.5 billion people and 21 million bitcoins is huge, and it is really possible to effectively play. And all sort of makes sense: the average person can have no more than 0.0028 BTC, so you need to quickly buy the coins and escape from this level upwards. But here I ask two questions:

  • who said that all people have to buy bitcoins?
  • where did the binding to 1 BTC for each person?

On the first point: to operate the entire world population in this theory is unfair and incorrect. Even if Bitcoin is recognized on a global level as legal means of payment, not buy absolutely everyone. Some countries in that case, surely his ban, and poor segment of the population is simply not investing. It is important to find food.

The Bitcoin network works a little less than eleven years. Today the number of active BTC addresses is 377 thousand. Even one billion is still very far away.

The number of unique active Bitcoin addresses. Source: Blockchain.com

It is also important not to forget about the older generation that can barely cope with cell phones. Download of the blockchain to your computer (which must pre-purchase) and registration on the exchange will definitely be a daunting task.

And in General access to a computer with a good Internet is not available in all countries. You can remember the same India, the major countries of South America, Africa — there is a problem with that. And in the CIS countries is possible. Especially away from the big cities.

Interim conclusion: in this theory it is impossible to speak about 7.5 billion people. Bitcoin will own a lot less people. This number can be divided into thousands, and even tens of thousands of times.

On the second point: snap to 1 BTC per person is also unfair. A person can buy 0.33 BTC and feel great about it. Or save up 0.06 BTC — why not? Bitcoin is still divided on Satoshi, that is, 0.00000001 BTC, and they, too, can pay. Savings amount can be any, but the focus is on 1 BTC makes no sense.

Interim conclusion: even if a man should fall 0.0028 BTC — this is normal. Bitcoin is successfully divided into small fractions and works great with them.

The demand for cryptocurrencies guarantees nothing

Now look at the other part of the theory. Experts believe that as soon as a person is aware of the need to run out and buy BTC, its rate will fly to the moon.

Sounds logical — at least in accordance with the law of supply and demand. But the growth rate of Bitcoin is not. At all. Why?

Look at the total number of users wallet Blockchain.com. Now they are at least twice more than the end of 2017, when Bitcoin was flying towards his record. It turns out that the cryptocurrency has become much more popular, it knows far more people — and indeed it is.

The number of user wallets from Bitcoin. Source: Blockchain.com

But what’s the trend? It is at least 2.5 times less than its historical maximum of 20 thousand dollars. Accordingly, for the Year a little to the popularity of cryptocurrency. So, the growing number of familiar with the technology people does not warrant a new price record.

Graph of Bitcoin exchange rate over the past three years. Source: CoinMarketCap.com

So all will solve limited supply of Bitcoin?

If demand doesn’t help, then I hope on a limited supply, right? Bitcoins will not exceed 21 million, print them out of thin air like dollars — will not work. Accordingly, the cryptocurrency more secure, it is necessary to buy, and the rate will only grow. Seems logical.

But no. Refer to the coin Maker. Her point is that the turnover is just one million MKR, that is essentially an artificial scarcity.

Indicators MKR Maker. Source: CoinMarketCap

In accordance with the logic of the theory of the Year of Bitcoin because of the limited coins the course Maker should continue to grow. Or at least stay on the same level. But no.

Rate graph Maker MKR. Source: CoinMarketCap.com

The chart on cryptocurrency and there are jerks up, and a serious fall. It turns out, in the world of crypto-currencies the exchange rate will not help the limited offer.

The reason in the device market: there are those who play to increase, and those who shortit. And that's all.

Gold vs cryptocurrency

Do not forget about the main metal in the world. By the way, Bitcoin is often referred to as digital gold, because its volume is also limited. In accordance with the theory of the Year the price of gold should also rise, as each mined ounce of the metal is less. And the number of investors sort of increases. But no, the chart of the pair XAU-USD since 2003 also fails.

Graph of rate of gold (XAU-USD) since 2003. Source: TradingView.com

Here gold was held in August 2011, but since then, such price records the asset is not installed. Although every year gold becomes less affordable — just like bitcoins. It turns out that the limitation of supply, again, does not guarantee the continuous growth of the prices.

The maximum number of bitcoins doesn’t matter

21 million or 21 billion BTC in this case plays no role. Even if Bitcoin becomes an international medium of exchange, the maximum amount of coins will be enough, because the economy will work with any amount of money.

Remember the fact about the denomination, i.e. a change of the nominal value of banknotes? Had ten thousand rubles — was ten. The principle is the same.

Bitcoins. Source: 2Биткоина

Besides, as I said, Bitcoin is able to break up into tiny fractions. And then, for example, a person with 500 thousand Satoshi in the stash would be completely normal to feel.

Altcoins hurt Tutumunu

If the world there was only one cryptocurrency — Bitcoin — then the increased demand would have really sent a course to the moon. But in the market there are at least 4909 altcoins that people buy including BTC. They just hope for more significant growth rates and greater profits, so be ready to pay for the Alta portion of bitcoins.

The number of cryptocurrency according to CoinMarketCap. Source: CoinMarketCap.com

Accordingly, altcoins like pull the blanket portion of the money users of the cryptocurrency itself, but finances do not concentrate solely around Bitcoin. So the impact on the rate of the latter will at least not be so powerful.

What you need for the Year of Bitcoin

The funny thing is that the prophecy of the maximalists on the growth of Bitcoin to new heights can come true any day now. And it does not have activity for several billion people. For a new stage of mass hysteria around the crypt — that is bullrun — enough for a pair of three green candles on the chart BTC that will last at least a few months.

Here. Source: 2Биткоина

During this time, the game will connect to the TV that will tell about the already forgotten the miracle of the assets of ordinary people. And then the industry will pour money. All in 2017 — then the growth rate was not uniform. The first of August to the first of December (four months) the price of BTC rose from 2860 to 10145 dollars. And after two and a half weeks the exchange rate broke the mark of 20 thousand and flew down.

Also during this period begins increasingly to sound like the history of friends — neighbors, coworkers, and distant relatives, who at one time bought bitcoins at a low price and made a fortune. In other words, start syndrome loss of profits or FOMO. This is when a person is afraid to miss a good opportunity — in this case investment.

Graph of Bitcoin in 2017. Source: CoinMarketCap

Unfamiliar with the investment people need several months to hear about the wonderful growth of the value of the asset and finally decide to spend their money.

Whether you believe the maximalists?

Conclusion: the theory of the growth of Bitcoin due to the limitation of the maximum number of coins doesn’t work, although Here it can happen without it. And while the maximalists use these theses to save the market from the mass discharge of coins that did not meet expectations of investors. Perhaps we can understand them.

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