Episode 5 of the Go Full Crypto Podcast was all about the mining process. Bitcoin mining is one of those topics that you hear about at your dinner table, but not a lot of people actually understand it. Mining is the process in which more bitcoin are brought into circulation. Understanding bitcoin mining is useful because you are able to compare it against the way that other money is brought into circulation. As we saw in the 2020 economic crisis, governments have opted to create/print the money. Go Full Crypto touches on why this is such a big deal, and what this means for the average citizen.

21 Million Bitcoin

There are only 21 million bitcoin. Having a finite amount of something makes it rare. This 21 million number may never be changed. Unlike the government, where they can print more money if they need it, there will never be more than 21 million bitcoin. This is because bitcoin isn’t run by any one government, business, or individual. There is no President, CEO, or Janitor of Bitcoin. The whole system is run by individuals, and businesses both big and small.

Inflation

Inflation takes place when the money supply goes up. When this happens, your money becomes worth less. That is, you can buy less with it, because everything else gets more expensive. If you normally pay $1 for bananas at the store, inflation is when those same bananas cost you $2. The more inflation that happens, the more you pay for goods and services. But your paycheque doesn’t typically rise with inflation. Instead, as things get more expensive, you get paid around the same amount. In extreme cases such as Lebanon, or Venezuela, inflation can get so bad that the economy crashes entirely. This is called hyperinflation.

The Antidote to Inflation

The antidote to inflation is the ability to cap the amount of money that exists. The fact that there are only 21 million bitcoin, and no one can change this, means we finally have a money on this planet that cannot be tampered with by humans. For the first time in history, the people may voluntarily use a currency that no government can control, or bring into hyperinflation.

How Mining Regulates Supply

In 2009, there were ZERO bitcoin. in circulation. Now there are approximately 18.5 million bitcoin, more that 88% of the total 21 million. The amount of bitcoin that comes into circulation every 10 minutes, decreases by half every 4 years.

2009: 50 Bitcoin Every 10 Minutes

2012: 25 Bitcoin Every 10 Minutes

2016: 12.5 Bitcoin Every 10 Minutes

2020: 6.25 Bitcoin Every 10 Minutes

The bitcoin releases more bitcoin into circulation every 10 minutes. In 2009, fifty new bitcoin would come into circulation every 10 minutes. Every four years, the number of bitcoin coming into the system decreases by half. So less and less bitcoin gets brought into circulation as time goes on.

We can Predict the Money Supply

The best part about the mining process is that we are able to predict the bitcoin supply with certainty. The supply of government money is not dictated by math and computers, it is dictated by humans. We know approximately how much bitcoin will enter the system in a given day, week, month, and year. This is very useful because when the money supply fluctuates drastically, it can have very negative consequences for regular individuals. Now we have a system where we can predict with certainty what the supply of money will be, and when.

Ready. Set. Go Full Crypto.

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