Increasing Number of Bitcoin Payments

Does Circulation Supply Of Bitcoin Would Create Supply Demand Gap?

Bitcoin, the pioneer of the cryptocurrency ecosystem and the token which introduced the world to Distributed Ledger Technology has turned a decade old. During its small life span of 10 years, Bitcoin has seen many ups and downs, but in the last couple of years, it has got its due.

Even the biggest critiques have come around to realize that the technology is here to stay, and all the PR mileage they used to receive by Bitcoin bashing seems to have toned down quite a lot as well.

However, Bitcoin despite all its technical marvels and advantages still faces a lot of issues on its chain, ranging from scalability to higher transaction fee and a much slower transaction speed when compared to other altcoins. In recent times, people have also shown concern towards the limited supply of Bitcoin, and how it would impact the world once all the coins are mined by somewhere around 2140.

So, is the concern valid? would a limited supply of 21 million Bitcoin lead to a supply-demand gap in the near future? We will try to analyze various aspects of the Bitcoin and its acceptance to see whether the limited supply could be a cause of worry for the developers and if yea, what possible measures can be taken to avoid it.

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Bitcoin’s Limited Supply Debate

During one of the recent Satoshi round table conference, there were two major highlights, one was the suggestion to decrease the block size of Bitcoin to 300-Kb to address the slow transaction speed. While there were not many takers for the idea, but it still made headlines. Another suggestion was to increase the total supply of Bitcoin.

The idea was mainly perpetuated looking at the tremendous growth and expansion of the Bitcoin as a mode of payment. Many believe the circulation supply of 21 million won’t be able to meet the needs of increasing demand and might create a supply-demand gap.

The argument is valid given the increased level of interest and the wider acceptance that Bitcoin has achieved. With just 21 million of its total supply, 80% has already been mined and the rest 20% is scheduled to get mine by 2140. The concerned group of people who are worried about the limited supply argues that once all Bitcoins get mined, the scarcity might lead to manipulation of prices.

Another argument is that once all the Bitcoins are mined, there won’t be any reward for the miners to verify the transactions, thus the network might have to bring in a centralized system to do the same which would be the basic principle of decentralization on which it was created.

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Scarcity and Limited Supply Makes Bitcoin Valuable

The growing demand for increasing the total supply might not be all great, as the Bitcoin core team does not really seem interested to make changes to the original protocol, many believe changing these protocols would make Bitcoin like any other thousands of crypto token in the market.

Whenever Bitcoin is pitted against the fiat or compared against it for efficiency, the biggest argument is that it cannot be created out of thin air like other fiats. Many believe that Satoshi’s decision to keep a limited supply is the major reason for its high prices. If the core developers decide to increase the supply, then Bitcoin will lose its shine.

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Final Thoughts

The limited supply is definitely a valid concern, but people need to understand that Bitcoin attracted such attention only due to miraculous rise on the trade market price charts. Changing the original protocol might also attract a public backlash which might be hard to contain.

If usability and the supply-demand gap is the only concern then the developers might look to create a sub-division to existing Bitcoin, it would not only fulfill the demand-supply gap but make it much feasible as the daily driver.

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