80 percent of bitcoin has officially been mined and more than 16.8 million bitcoins are in circulation. While the majority of bitcoin mined in the early days were produced by individual miners, multi-billion dollar firms are starting to enter the global mining sector.
Evolution: From Individual Miners to Multi-Billion Dollar Facilities
Traditional assets and currencies are controlled and issued by central entities. Consequently, their supplies can be altered and manipulated by the authorities. The US dollar in particular, the reserve currency of the global economy, has its supply controlled by the Federal Reserve Bank through a method called quantitative easing, a complex term for a simple concept of printing more cash.
Unlike traditional currencies and assets, the supply of bitcoin is fixed and the rules of the cryptocurrency are determined by its decentralized protocol. Bank of Finland researchers described bitcoin as “a monopoly run by a protocol, not by a managing organization.”
While analysts and critics of bitcoin and other cryptocurrencies consistently state that the value of bitcoin is not backed by anything, the value of bitcoin originates from a basic economic concept of supply and demand. In the global market, intrinsic value simply does not exist. Value is always subjective and it solely depends on the supply and demand of the market.
Bitcoin is valuable because of its security, computing power, fixed monetary supply, and rising demand from the global economy. Because only 21 million bitcoins can ever exist, despite the rising demand, more bitcoins cannot be mined or produced once the supply of bitcoin hits 21 million.