Bitcoin was created as a decentralized currency with a limited supply. As a consequence, it is prone to deflation.
Total spendable supply of BTC will always differ from the total theoretical supply for several reasons.
A miner might choose to underpay him or herself which might destroy the reward and prevent the number of created Bitcoins from reaching a possible maximum. Bitcoins can be sent to a wallet, a private key of which is lost. Even though such an event wouldn’t be officially considered destroying Bitcoins, the actual chance of restoring the private key is negligible. Therefore it wouldn’t be possible to spend these Bitcoins. It is also possible to destroy Bitcoins on purpose, for example, by sending them to a wallet specifically created to pass validity check but one that lacks a private key.
Unlike traditional fiat currencies, Bitcoin is decentralized. Its design prevents all attempts to alter or somehow regulate the emission of BTC. Instead, the process is controlled by the cryptographic algorithm, which defines the regularity, time, and quantity of issued Bitcoins.
Unlike traditional fiat currencies, BTC is decentralized. Its design prevents all attempts to alter or somehow regulate the emission of Bitcoin. Instead, the process is controlled by the cryptographic algorithm, which defines the regularity, time, and quantity of issued BTC.
Any attempt to alter the data on the number of issued coins is denied by the system unless it complies with the regulations of the whole blockchain, which makes it feasible to authenticate transactions without synchronizing the complete blockchain.
Bitcoin Mining and emission
Bitcoins are issued as a reward for Bitcoin mining. New blocks are supplemented to the blockchain at a predetermined frequency of six blocks every hour. Every four years the reward for successfully mining a block is halved. This design entails that the amount of Bitcoins is restricted – estimations are that the last Bitcoin will be mined in 2140. Only 21 million Bitcoins can be in circulation.
Since the maximum number of Bitcoins is fixed at a limited amount, BTC would experience extreme deflation if the currency grows to be broadly used. It is generally considered that deflation impacts the economy negatively since it encourages to save money rather than invest. Therefore fewer new businesses are established, and scarcer new jobs are created. Some, however, argue that the deflation is a positive factor for the investors as it prompts to invest in longer-term projects.
How many Bitcoins are in circulation today
Total supply of Bitcoins at the present moment ( June 2018 ) is speculated to be around 16.7 million.