What is the Bitcoin Programmed Scarcity?

One of the most curious features of Bitcoin is that the highest number of coins it can produce is predetermined since its creation at 21 million Bitcoin.

This may be because the creator of Bitcoin (under the pseudonym Satoshi Nakamoto) determined that he wanted to generate a deflationary currency, like gold.

If something is naturally limited it is more likely to have a cost. If Bitcoin could be produced indefinitely and out of control, it would have no cost (or could be quite temporary).

Limiting their number increases the possibility that this asset, being limited, could eventually have a larger value.

Now, what will happen once the 21 million Bitcoin limit is reached?

Currently, about 16 million Bitcoin has already been mined, which is 75% of the final cost. It is believed that by 2032, 99% of the Bitcoin will have been mined.

Bitcoin’s Halving is the process where every 4 years the reward that miners of the currency receive, decreases and it is less profit that they get in the long run this will make the costs of mining Bitcoin more expensive and there is a strong possibility that the number of miners that exist will decrease.

With this in mind, as the production rate is going to be lower it is expected that this number will not be achieved until 2140 once the last Bitcoin is mined.

Finally one of the reasons why Bitcoin has both values is because of its scarcity. This is why Bitcoin is more like a cost pooling asset (like gold) than a means of payment like a currency.