So, here’s the thing, many people think Bitcoin’s supply is fixed at 21 million and that’s it. But in reality, it’s much more complex than that.

What needs to be understood is that there is a significant difference between the total Bitcoin mined and the Bitcoin that is actually available and active in the market. It’s not just about the numbers, but about the supply dynamics that keep changing over time.

Let’s look at the projections. In 2012, when Bitcoin was still very young, only about 10.5 million BTC had been mined. Of that amount, maybe 0.2 million were lost or held long-term, so the effectively circulating supply was only 10.3 million. At that time, most coins were still liquid and moving.

Fast forward to 2024, and the situation is much different. The total mined now reaches 19.7 million BTC, approaching the maximum limit. But here’s the interesting part: about 2.3 million BTC are already lost or stored permanently, leaving only 17.4 million actually circulating. This reflects how more long-term holders are holding their Bitcoin tightly.

If we project into the future, this trend will become even more extreme. By 2030, although the total Bitcoin mined will reach 20.5 million, the lost or inactive supply is estimated to be 3.6 million. That means only 16.9 million are effectively available. Then in 2050, even though the max supply of Bitcoin is nearly reached at 20.95 million, the effective supply drops drastically to just 12.6 million because 8.4 million are already lost or stored permanently.

And ultimately, in 2100, when Bitcoin mining is completely finished, only 7 to 8 million BTC will still be active in the market, while 13-14 million will be lost forever.

So what does this mean? Although Bitcoin’s max supply is capped at 21 million, the real market situation is much tighter. The mining rewards keep decreasing toward zero, while lost coins continue to pile up. The result is that the circulating supply not only peaks but then significantly declines even as the total supply keeps increasing.

This means Bitcoin is structurally a deflationary asset. Not just because of the limited supply of 21 million, but because more and more Bitcoin are permanently taken out of circulation. From a market economics perspective, this makes Bitcoin increasingly scarce over time, not more abundant. Quite interesting to think about, especially when considering its long-term implications.