Topic: Can Bitcoin cover total liquidity (Read 136 times)

Well, if everyone had enough bitcoins to cover their net worth, we would probably have to rename the currency "Bit-Everything".

But in all seriousness, the idea that everyone needs to have enough bitcoins to cover their net worth is a bit misguided. Bitcoin, like any other currency, is simply a medium of exchange. Its value is derived from the fact that people are willing to accept it in exchange for goods and services. As long as people continue to value bitcoin, it will continue to have value. As for the issue of circulation, it's true that the supply of bitcoin is limited, but that's by design. It's what gives the currency its scarcity and, by extension, its value. The good news is that you don't need to own a whole bitcoin to participate in the market. You can buy and sell fractions of a bitcoin, just like you can buy and sell fractions of a dollar. So, while it's true that the supply of bitcoin is limited, it doesn't mean that everyone needs to have a whole bitcoin to participate in the market.

Are those numbers an assumption or a correct statistics, because I never imagine to rate the total number of lock/lost BTC that high. Possible 15million in total circulation means about 6,000,000 is assumed to be lost/lock. If am to make such a calculation I would probably see  6M as an impossible percentage of lost.

It is difficult to try to figure out what you mean, but it seems you think the supply of bitcoin is not enough to sustain the whole economy moving through it and this is false, this just means that if the whole economy used bitcoin as its currency then the value of each bitcoin will grow tremendously, so do not worry about such a thing as it is useless to do so since this is not something which will actually happen, as the governments around the world will never quit printing their fiat currencies and forcing us to use them.

there are going to be (minus off locked/lost bitcoin) about 15m bitcoin still circulating when all coins(21m) are mined

lets call it a worse case 15m left in circulation after all locked/lost access coins are ignored

thats 1,500,000,000,000,000sats
lets imagine a near future 10million population
that means each person if treated equally would be

1,500,000,00sats each which if 100sat was $1= $1,500,000 each person equally

or the $1 for 100 sat means
$15,000,000,000,000($15 trillion) for circulation

I am not sure whether I understand your post, but are you asking whether it is a problem that there is less Bitcoin in USD value than there is USD in total? The second part of your comment probably refers to maximum transaction throughput compared to global daily transaction demand (or for now USD transaction demand)?

You have actually detected a major problem of today's economy. There will always be more FIAT USD than there is real value justifying the amount of all the USD money printed. The result is inflation. Real value desperately appreciates, but not in value, only in numbers, following the pace of the money printing machines as much as possible. At some point the market realizes that no matter how much money is printed, an asset relative to other assets doesn't increase in real value because of that.

The question is not whether Bitcoin can cover all USD notes out there as of yet. The question is whether people want to switch from a money that can infinitely be manipulated and boated up to a money that can't be. If I pay you 100k USD for your apartment and bread costs 10 USD, you are in no different situation than when I pay you 200k USD for your apartment and bread costs 20 USD. With FIAT money you can play that game infinitely, and infinitely dangerously because it is prone to collapse and not all asset prices adjust according to some money printing logic, evening out dangerous economic effects.

That is why Bitcoin is interesting, it is a system outside the existing system. This means that if Bitcoin is globally appreciated by all people, no national currency could be printed to easily buy Bitcoin up because it would have its own value that could appreciate beyond M0, M1, M2 and M3 of a national currency.

I hear you loud and clear, pal. Bitcoin's circulation ain't up to snuff with the total money supply, but that's all good. Liquidity's increasing at a steady clip. More and more folks are hopping on the Bitcoin train, and that means more vendors will accept it as payment. That, my friend, leads to increased liquidity. Plus, because Bitcoin's not controlled by any central authority, it's more secure and transparent. People are starting to trust it more. Yeah, mining uses a ton of energy, but we're making strides to make it more sustainable. There are already some mining operations that use renewable energy sources like wind and solar. Trust me, we'll get there. Pretty soon, everybody's gonna be flush with Bitcoins.

The point I got from the OP is that the total cap ($) in circulation doesn't cover all the bitcoins in circulation (mined) if based on the current price. Then it is correct (imo), and it is necessary to understand that it's the total cap that covers the entire trade and this price is generated by Ask/Offer for all btc pairs whether against fiat or other crypto. Also currently not all bitcoins are actively (or have ever been) traded.

If what you are asking is if there can be 1 fiat money for every Bitcoin in circulation, then we already achieved this. If you are asking if there is a way to determine the total amount of liquidity against the Bitcoin supply to see at what price Bitcoin is 100% liquid, there is currently no possible solution. The reason for this is because too many centralized exchanges manipulate/control the order books and make it impossible to see the real amount of Bitcoin that is backing it. Adding margin/leveraged trading into the equation makes it even more difficult. Until everything is transparent, it won't be possible.

If people start using Bitcoin to show their wealth, I personally expect the price of Bitcoin relative to other currencies to become stable, or even increase depending on how inflation goes. But regardless of that, if people want to use Bitcoin to trade, there will be trades happening around the world, and I'm pretty sure sellers won't sell their BTC if the price is terrible (in most cases). There won't be any liquidity issues since people can simply buy again if they need to unless I misunderstood some of your points.

Others have mentioned it already, but there is no way people can own Bitcoin without spending/investing in something, just like how people can't own gold if they don't buy or mine them on their own. Do you expect everyone to own gold without any cost? I bet you don't think so. The same thing applies to Bitcoin, or any asset in general. Their limited nature is what makes them valuable, to begin with. CMIIW.

Let's compare both Bitcoin and USD.

Currently USD circulation supply is 23,856,086,467,000 USD or 2,385,608,646,700,000 cents. While BTC circulation supply is 19,342,106 BTC or 1,934,210,600,000,000 satoshi. It's quite closer if we compare with the smallest unit, how you can say BTC circulation supply is far less than fiat money? Check the marketcap here https://fiatmarketcap.com/

Bitcoin isn't created to make everyone rich anyway.

you look too much at bitcoin in terms of amount, and you forget the price.
you might think about
the human population on earth today, which is around 8 billion, if everything is shared by bitcoin it will definitely not be enough.
if you think like that, in my opinion wrong. in fact, if bitcoin liquidity is multiplied, the price will definitely decrease.

So even though there are only 21 million bitcoins in the world, that doesn't mean that that amount won't be enough for one world, because bitcoin isn't a matter of having a large number, but of a very high price growth. so don't equate the circulation of fiat money with bitcoin, because bitcoin is not like fiat money.

You don't need to dig any research though, bitcoin has limited supply and we are about to hit the threshold of almost 20 million in circulation in the next couple of halvings (including the next one).

So yeah, it might not be enough for everyone to own sats in the future.

As for mining and hashrate, the hardware will adjust, mining companies will have to create to be able t adjust to the difficulty. And with limited supply, the price is going to shoot up in the future. So it's up to us to just stack sats as many as you can if we wanted to have financial freedom.

It's not clear what you mean by "amount". If you mean the number of bitcoins, then it should be pointed out that the number is arbitrary and irrelevant as a bitcoin can be subdivided to millisatoshis, giving a total of 2.1 quintillion units. If you instead mean the value of the bitcoins, then I would say that the value of the bitcoins in circulation will rise to whatever value is necessary due to the economics of money and Bitcoin. Note that this is the reason behind investing in bitcoins. The assumption is that adoption will increase and the value of the bitcoins will necessarily increase.



Even Hal Finney believed the common misconception that there is (or must be) enough money in the world to back the total net worth of the world. It is not true. Money is reused. For example, if I own a house, there is no money sitting in a bank somewhere backing the value of the house. When I buy a house, then the money I pay the previous owner is used by them to by their new house, and then it is used again to buy a new house for that previous owner, and so on...

Bitcoin has up to 8 decimals places as of now, remember?

That's why one can still own 0.0001 BTC. It doesn't always have to be just 1 BTC, like some fiat currencies are. So I believe there won't be a circulation problem. Besides, Bitcoin was just created an alternative p2p electronic cash transfer system and not a currency that must be used by everyone. Let's be realistic, not some many Governments will allow Bitcoin to be their legal tender because Governments are all about control. With Bitcoin, they will lose grip of their control.

If everyone will start switching to Bitcoim, its value will explode and satoshis will be like dollars. Since one Bitcoin is 100 million satoshis, there's more than enough satoshis to cover the global needs for units of account. Plus Lightning Network allows dividing sats further. And if the need will arise, maybe the protocol itself will further split satoshis.

I am finding it difficult to understand your test, or you should probably go back to your research and the source for clarification. 
I don't see how the total number of bitcoins in circulation is lower than the amount of money in circulation. 
The Bitcoin ecosystem is large enough to accommodate everyone; it's already doing so, and the amount of supply that Bitcoin has is enough to serve everyone in as much as it can reach every 1; it is still more than enough, but its limited and small supply makes it scarce and valuable.
 

According to my knowledge from a research article of which I got from a reliable source I understood that the amount of Bitcoin which is in circulation is far less than the total money available in circulation.also the Bitcoin ecosystem is not large enough to cover liquidity properly Since mining is not promisingly efficient how will enough Bitcoin get into circulation? Such that everyone has enough Bitcoins to cover their net worth