Bitcoin Production is Going Towards Zero, Hyperbitcoinization will Affect BTC/USD Exchange Value
- After 3 more halvings BTC market value could be as high as $100 trillion
- Could a new coin with lower emission rate than the Bitcoin have greater value?
Crypto analyst, planB took to Twitter to share how in the next less than a decade, Bitcoin production will go to zero with three reward halvings left that he says could have its market cap as high as $100 trillion and due to hyperbitcoinization, USD will lose its value to a great degree.
Talking about the stock-to-flow approach he takes to Bitcoin, planB address the four issues raised by Adamant Capital’s Tuur Demeester.
These four issues involve,
- How to define “stock” in bitcoin. How do we know how many coins have been lost? Estimates vary between 1-4 million.
- Bitcoin's production is trending towards zero. Does that mean its value should trend to infinity?
- S/F estimates for gold and silver are quite debatable
- How does a pre-defined low production rate somehow create value? If I create a new coin with a lower emission rate than BTC, shouldn't it then according to this model have greater intrinsic value?
“BTC production is indeed going towards zero, implying infinite value”
In explanation, he shares that the millions of bitcoins lost do not impact the S2F model rather just changes the parameters of the formula a bit. He further shares four ways to adjust for lost coins including no adjustment, cut first 1 million coins, cut even percentage lost, and the combination of the latter two that is cut first 1 million plus the even percentage of lost Bitcoin.
Further talking about the Bitcoin reward halving, at one point after all the limited 21 million supply of BTC is produced, the production of the leading cryptocurrency will be turned zero.
Currently, 84.53% that is 17,750,963 BTC have been produced and in May 2020 we will have our third Bitcoin reward halving that will cut down the coin reward from 12.5 to 6.25 coins. Just like this, the last two bitcoin halvings will occur in 2024 and 2028.
3) BTC production is indeed going towards zero, implying infinite value. But this is a theoretical issue, practically after 3 more halvings (2020,2024,2028), BTC market value could be as high as $100trn (if S2F still valid) .. USD value will be affected: hyperbitcoinization. pic.twitter.com/k4dfAzaN4v
— planB (@100trillionUSD) June 9, 2019
As for the S2F estimates for gold and silver that Demeester says is debatable, while sharing his sources, planB says the gold and silver S2F is only used as a benchmark and do not impact the S2F formula of Bitcoin.
Bitcoin S2F Remains the Same despite these Technicalities
But what about a new coin with a lower emission rate than the Bitcoin? Could it have a greater value?
A new coin with low production is a key question but according to the analysts no one will succeed in creating a cryptocurrency that has “unfogeable costiliness” and on top of that the world’s top cryptocurrency already has a 10 years head start.
The value is not created by production rather stock, argues planB. According to him, that coin should have “unforgeable costliness.” By this, he means,
“if supply cap, PoW, hashrate, decentralized, no server but nodes, no CEO, network effects .. maybe a valuable stock will grow.”
5) New coin with lower emission rate, will it have greater value? Not production but stock creates value! Your coin should have ‘unforgeable costliness’: if supply cap, PoW, hashrate, decentralized, no server but nodes, no CEO, network effects .. maybe a valuable stock will grow.
— PlanB (@100trillionUSD) June 9, 2019
He also addresses the demand side about which he says even not having demand does not prevent Bitcoin from having 95 percent R2 and point out that there is always a demand for money.
The issues of lost coins, production trending towards zero, and gold and silver, planB says are just technicalities and not some fundamental issues.