How Many Bitcoins Are There?
How many Bitcoins are there?
Bitcoin has a finite number of coins. In fact, there will only be 21 million bitcoins in 2140 once the last bitcoin is released into circulation. Currently, there are about 16.7 million bitcoins in circulation and almost a third of them have been lost.
How are bitcoins released into Circulation?
The primary way bitcoins are released into circulation is through mining. When a person with the right computer hardware and software verifies enough transactions to fill a block, he or she is rewarded with 12.5 bitcoins. Back in 2009, there were fewer bitcoin miners and the block reward was bigger. It’s believed that bitcoin’s founder, Satoshi Nakamoto, mined most of the blocks in 2009.
Bitcoin’s Circulation history
As bitcoin became popular, more people started mining. In 2009, a computer with a computing speed of 5 mega hashes per second could mine a block of bitcoins in a few hours or days. When bitcoin exchanges were launched in 2010, more people became miners. The block reward at the time was 50 bitcoins. The reward remained 50 bitcoins until mid-2012 when it was halved to 25 bitcoins. The reward was halved once again in 2016.
As more bitcoins were released into circulation, miners increased. At the same time, the difficulty to solve the math puzzles required before you verify a bitcoin transaction increased. Bitcoin miners started using GPUs to mine faster around 2013. The trend continued until mining with GPUs was no longer profitable. Nowadays, bitcoin miners use specially designed ASIC machines. Learn more about bitcoin mining on 99bitcoins, one of the most reliable sources of information about cryptocurrencies.
ASICs contain special chips that can solve the math puzzles needed to mine bitcoins fast. Each ASIC has a specific mining speed. The computing speed is measured by how many hashes they can run per second. A good ASIC machine has run up to 14 trillion hashes per second.
How to Calculate the Number of Bitcoins in Circulation
Everything about bitcoins is recoded on a decentralized ledger known as the blockchain. At the time of writing, 514,494 blocks have already been verified and added into the blockchain. The transaction data on this ledger cannot be altered.
As such, it’s easy to determine how many bitcoins have so far been released into the market. According to this analysis, 144 blocks are added to the blockchain on a daily basis. At the current block reward of 12.5 bitcoins, 1800 bitcoins are released into circulation every 24 hours. Based on this calculation, miners will generate 1.48 million bitcoins until June 2020, when the reward will be halved to 6.25 bitcoins.
Currently, 16.931 million bitcoins are supposed to be in circulation. These bitcoins represent 80.62% of all bitcoins that will be released at the end of it all. However, not all of the 16.931 million bitcoins can be accounted for. A lot of bitcoins have been lost along the way.
How are bitcoins lost?
While gold bars are lost in the deep sea and money burnt, bitcoins can only become inaccessible. Bitcoins are virtual currencies stored in digital wallets. A wallet is:
- A mobile application that stored your coins online
- A desktop program you download
- A hardware device in the form of a flash drive
- A paper with your bitcoin address and keys needed to access your coins.
Each of the above types of wallets has two encrypted characters known as keys. One key is private and should never be revealed to anyone. The private key enables you to withdraw your bitcoins into real money. The second key is a public key. This key enables other people to send you bitcoins. Nowadays, bitcoin wallets generate a unique address that is different with every transaction. This ensures you do not have to share your keys with anyone.
There are several ways you can lose your bitcoins while they are in your wallet:
- You accidentally delete your mobile or desktop wallet before you back-up the files in an external drive.
- You lose the only paper wallet you had.
- Your hardware wallet crashes and you had not backed it up.
- You forget the passwords needed to access your wallet.
- A bug in a mobile wallet compromises its systems and you can’t access your bitcoins anymore.
Notice that all of the above scenarios do not involve any hacking whatsoever. While thousands of people have lost their coins to hackers, these coins could still be in circulation. Again, sending bitcoins to an incorrect address does not mean the coins have gone out of circulation. It simply means you sent your coins to someone else.
Calculating the amount of bitcoins in circulation can be difficult. Most people buy the digital currency as an investment. As such, a lot of the bitcoins released into circulation lie idle in their owners’ wallets for years. Take, Satoshi’s bitcoins, for example. It is estimated that bitcoin’s founder, Satoshi Nakamoto, mined more than 1 million bitcoins in 2009. Satoshi has never withdrawn the coins; now valued at more than a billion dollars.
There are numerous theories as to why Satoshi has never withdrawn his funds, with some concluding he died. Satoshi’s identity has never been revealed, so all of the theories can’t be validated. When calculating the number of bitcoins lost, some organizations count Satoshi’s bitcoins. One explanation is that Satoshi probably forgot passwords to his funds and can no longer access them.
What happens when all Bitcoins are released?
Bitcoin mining involves more than releasing new coins into circulation. It’s the process through which bitcoin transactions are verified and added into the blockchain. When the last bitcoin is released in 2040, one of the greatest causes of motivation to miners will end.
Fortunately, miners are not rewarded with bitcoins alone. They receive the transactions fees people pay to have their transaction verified. Once the last bitcoin is verified, the transaction fees will be the only reward for miners.
It’s difficult to determine the exact number of bitcoins in circulation. However, 80% of bitcoins have already been released into circulation. The remaining 20% represent about 4.3 million bitcoins. Despite the number of coins in circulation, however, bitcoin is still the most dominant cryptocurrency. It is likely to retain its status quo until when another cryptocurrency with higher demand overtakes it.