The Hard Cap: What It Means for Bitcoin
Bitcoin, unlike your favorite fiat currency that seems to be printed endlessly, has a firm limit of 21 million coins. This hard cap is one of the unique characteristics that make Bitcoin appealing to investors and a potential store of value. As of now, we’ve already seen the disappearance of about 1.2 million BTC — a staggering 5.7% of the total supply — into the abyss of failed crypto exchanges. Talk about scarcity!
The Crypto Exchange Graveyard
What really drives the disappearance of these coins? Well, the infamous collapses of various crypto exchanges has caused major losses, with historical data revealing that 14 exchanges have collectively lost around 1,195,000 BTC. That’s 6.3% of the circulating supply of Bitcoin just evaporated into thin air! This all leads back to the murky waters of proof of reserves and regulatory clarity.
Lessons from Mt. Gox
If you thought crypto nightmares only happen in movies, think again! Mt. Gox, which is essentially the Godzilla of defunct exchanges, still holds the crown for the most notable BTC losses. According to Jameson Lopp, the co-founder of Bitcoin storage platform CasaHODL, events like these raise serious concerns about the safety and transparency of your beloved Bitcoin holdings.
Fake Bitcoin: A Disturbing Trend
Imagine this: you’re at a store, you see a brand new toy called “Not Quite Bitcoin” being sold beside the real deal. Sounds comical but sadly, this is happening in the crypto landscape. Approximately 80 crypto assets have conveniently included “Bitcoin” in their names to dupe unsuspecting investors. Among these fakers, 14 of them boast market caps over a million bucks. As Lopp stated, “Bitcoin will not be a great store of value if most people are buying fake bitcoin.” So investors, beware of your toys!
The Self-Custody Lifeline
To combat the chaos resulting from exchanges and fake Bitcoin assets, self-custody emerges as the knight in shining armor. By taking control of your own Bitcoin, you reduce reliance on crypto exchanges and eliminate the risk of “paper Bitcoin” contracts that are more prone to corruption. Basically, if you can hold it, you can control it.
El Salvador’s Steady Stance
Meanwhile, El Salvador’s President, Nayib Bukele, has announced plans to buy 1 BTC every day starting November 17, 2022. Talk about dedication! Currently, the country holds 2,381 BTC at an average price of $43,357. With Bitcoin’s performance stagnating, the question arises: will this open a window for El Salvador to acquire Bitcoin at much lower prices? Only time will tell!
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