In November 2017, The Bank for International Settlements ranked Bitcoin as the sixth most-circulated currency in the world, at $180 billion. The ranking, calculated when bitcoin was valued at $10,765 each, means the flagship cryptocurrency outranked the UK pound and the Russian ruble, and was only surpassed in total value by the rupee (India), yen (Japan), yuan (China), euro (Europe), and the US dollar.
While bitcoin has been performing extremely well over the last year plus, it is worth noting that the value of notes in circulation does not equate to total value of a currency. But with ethereum and bitcoin cash occupying spots #17 and #20, respectively, the rankings illustrate cryptocurrency’s rapid growth and increasing prestige.
The numbers are startling – in May 2017, a bitcoin was worth under $2,000, and total circulation was valued at around $40 billion. A little over six months later, a bitcoin was worth $19,400, bringing total valuation to $300 billion. Bitcoin mining machines are solving the increasingly-complex math problems needed to create new bitcoin about every 10 minutes, with each successful solution bringing 12.5 new bitcoin into the world. The roughly 16.7 million bitcoins in circulation today are almost 700,000 more than in December 2016.
There are questions about how bitcoin, whose finite supply is 21 million units, will respond after all remaining coins are mined (a milestone experts will be reached by 2040) and the total number in circulation is finalized. A recent report from digital forensics firm Chainalysis suggest between 2.78 and 3.79 million bitcoins have already been lost, the victims of misplaced wallet keys and other missteps. Present-day bitcoin owners appear to be much more vigilant in storing their holdings – the report finds that most lost bitcoins are from the early years of the currency, in 2009 and 2010, when it was significantly less valuable.
It is unclear whether bitcoin is scarcer by virtue of these losses or if the market has adjusted its value to these missing coins. Kim Grauer, Senior Economist at Chainalysis, believes the answer is complex: “Direct calculations about market cap do not take lost coins into consideration. Considering how highly speculative this field is, those market cap calculations may make it into economic models of the market that impact spending activity,” said Grauer. “Yet the market has adapted to the actual demand and supply available – just look at exchange behavior. Furthermore, it is well-known monetary policy procedure to lower or increase fiat reserves to impact exchange rates. So the answer is yes and no.”
Whether bitcoin continues its meteoric rise in value is debatable, but one fact is not – cryptocurrency is here to stay. Bitcoin, ethereum, and more are growing in circulation and influence, and the revolution is far from finished.