The Majority Of Bitcoin: Investment Or Currency?

Bitcoin is a cryptocurrency, a virtual currency that can be used as a store of value, a way to exchange value, or as a speculative investment. Its value comes from its finite supply, with a maximum of 21 million bitcoins available. As of April 10, 2024, the combined value of all bitcoins was about $1.39 trillion, with one bitcoin worth around $70,665. Bitcoin's value changes daily, and its volatility makes it attractive to investors and speculators.

Bitcoin ownership is widely distributed, with approximately 50 million people owning bitcoin. Around 74% of Bitcoin owners hold less than 0.01 BTC, and only 2.3% own 1 BTC or more. A significant proportion of bitcoins are held by institutions, including exchanges, miners, governments, and public companies. Bitcoin's blockchain is transparent, allowing anyone to monitor information on its ownership structure in real time.

Bitcoin's finite supply

Bitcoin has a finite supply of 21 million coins, which is a unique feature of the cryptocurrency. This limited supply is a key characteristic that differentiates Bitcoin from traditional currencies, where governments can print an infinite amount of money, leading to inflation.

The finite supply of Bitcoin is a result of its design by the anonymous creator(s) known as Satoshi Nakamoto. The maximum supply of 21 million bitcoins is expected to be reached around the year 2140, with new bitcoins being added approximately every 10 minutes through a process called mining. However, due to the use of rounding operators in the Bitcoin codebase, it is unlikely that the exact number of 21 million bitcoins will ever be reached.

The limited supply of Bitcoin has implications for its value. As Bitcoin becomes harder to mine and its supply approaches the limit, the existing supply of coins increases in value. This is due to the basic economic principle that the rarer an item is, the higher its price. The finite supply of Bitcoin also contributes to its appeal as a store of value, similar to gold, and has led to increased demand and investment in the cryptocurrency.

As of December 2023, there were approximately 19.57 million bitcoins in existence, with about 1.42 million left to be rewarded. The exact timing of when the last Bitcoin will be mined is uncertain, but it is expected to be well into the future, around the year 2140.

The finite supply of Bitcoin has also led to concerns about its impact on Bitcoin miners, who are incentivized by Bitcoin rewards. However, Satoshi Nakamoto envisioned a transition to transaction fees as the primary source of income for miners once the Bitcoin supply reaches its limit.

Bitcoin's value

On April 10, 2024, one bitcoin was worth more than $70,000 (at the time of writing its price was $70,665). There were more than 19.68 million bitcoins circulating, giving it a total value of over $1.39 trillion. This is a stark contrast to its price and market cap one year previously, when there were about 19.35 million bitcoins circulating with a $472 billion market cap.

As of March 2024, there were just over 46 million Bitcoin wallets holding at least $1 in value. However, around 90% of these wallets are inactive or hold minimal value. Less than half of the 46 million wallets (21.5 million) with any value are worth more than $100, and around a quarter (22.2%) of Bitcoin wallets hold a value of more than $1,000.

Bitcoin ownership

Bitcoin is held by institutions ranging from exchanges to public companies to major governments. Around 40% of the total supply of Bitcoin can be attributed to identifiable ownership groups, such as exchanges, government entities, public and private companies, mining companies, ETFs and other publicly-traded funds, consumer trading platforms, and dormant addresses.

Bitcoin's value comes from its store of value and payment system, as well as its finite supply of 21 million bitcoins worldwide. As of April 10, 2024, one bitcoin was worth more than $70,000, with a total value of over $1.39 trillion.

Before investing in Bitcoin, it is important to consider the risks associated with virtual assets, such as volatility, fraud, and theft. Additionally, privacy and security are important issues in the Bitcoin world, and investors should take necessary crypto security measures to protect their investments.

Bitcoin wallets

There are two main types of crypto wallets: hot wallets and cold wallets. A hot wallet is on a device that is connected to the internet and is often free to use. They tend to offer add-on services such as trading or staking in exchange for fees. A cold wallet is on a device that is disconnected from the internet and tends to cost money as you have to buy a piece of hardware that is set up to store your crypto.

Some popular hot wallet providers include:

• Zengo Wallet
• Crypto.com DeFi Wallet
• Guarda
• Exodus
• Coinbase Wallet
• Trust Wallet
• MetaMask

Some popular cold wallet providers include:

• Ledger
• Trezor

Bitcoin transactions

To use Bitcoin, individuals need a cryptocurrency wallet, which can be accessed via a crypto exchange. Wallets are used to store, send and receive Bitcoins, and each wallet has a public key and a private key. The public key is visible to other users and is attached to transactions, while the private key is kept secret and acts like a password, allowing the owner to authorise transactions.

There are several types of Bitcoin wallets, including online or "hot" wallets, and offline or "cold" wallets. Hot wallets are apps on internet-connected devices, such as computers or phones, and are best for small amounts of cryptocurrency or for active trading. Cold wallets, on the other hand, are not connected to the internet and are therefore considered more secure, but they require technical knowledge to set up. Examples of cold wallets include paper wallets, which are printed on paper and often laminated for safekeeping, and hardware wallets, which are typically USB-drive devices that store the user's private keys.

To acquire Bitcoins, individuals can use a crypto exchange to purchase them using various payment methods, including bank transfers, debit or credit cards, and even payment processors like PayPal. Bitcoin can also be acquired via Bitcoin ATMs, which act like in-person exchanges, or through peer-to-peer (P2P) exchanges, which facilitate direct transactions between users.

When sending or receiving Bitcoins, transactions are recorded on the blockchain, a distributed ledger that chains blocks of data together using cryptographic techniques. Each block contains a block header, transaction counter, and transaction data. While the data in each block is encrypted, it can still be read, ensuring that the blockchain remains auditable and secure.

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