- The supply cap of 21 million is designed to keep inflation at bay.
- Fear of missing out will rise to a new level.
The limited supply of Bitcoin is one of its most distinguishing features. There are 21 million Bitcoins in circulation. There has been a dramatic increase in Bitcoin’s scarcity as more than 90% of the total quantity has been mined.
The supply cap of 21 million is designed to keep inflation at bay. However, this has pushed up the cryptocurrency price because it has made it more difficult to obtain.
Even though issuance does not dictate liquidity, since already-issued coins may and often are exchanged on the market, the reality is that most of the circulating bitcoin supply is owned by companies with next to no history of trading. Fear of missing out will rise to a new level when people, institutions, and governments realize Bitcoin’s rarity.
Future of Bitcoin
Bitcoin is projected to transition away from block rewards. Towards transaction fees as a key source of income once the supply ceiling is reached. According to certain expectations, the Bitcoin blockchain may be limited to only validating huge batches of transactions or transfers involving significant sums of bitcoins due to the Lightning Network and other side channels.
In the future, the identity of Bitcoin will be more clearly defined as a store of wealth and a means of exchange rather than a cryptocurrency.
There is no guarantee that any of these forecasts will come true. It is difficult to accurately forecast the future of Bitcoin because of the rapid pace of change in the Bitcoin ecosystem. However, the protocol may be modified to allow for more than 21 million bitcoins to be created. There is still a chance it will fall just short of 21 million.
