The hard cap of 21 million on the total circulating supply of Bitcoin (BTC) is one of the main characteristics that set it apart from fiat money and the majority of cryptocurrencies. But throughout the last 10 years, a number of cryptocurrency exchanges have closed, taking at least 5.7% (1.2 million BTC) of the whole Bitcoin supply from circulation.
As was recently the case with FTX, the lack of clarity surrounding a crypto exchange’s proof-of-reserves emerged as the main cause of their abrupt collapses. According to historical information about cryptocurrency collapses, a total loss of 1,195,000 BTC, or 6.3% of the 19.2 Bitcoin now in circulation was caused by 14 crypto exchanges.
Mt. Gox continues to hold the top rank when it comes to exchanges losing BTC holdings, according to research conducted by Jameson Lopp, co-founder and CTO of the Bitcoin storage service CasaHODL.
Although Lopp stated that the ecosystem is currently threatened by fake Bitcoin offerings and that “Bitcoin will not be a wonderful store of wealth if most people are buying false bitcoin,” it is accurate to say that the value of Bitcoin as an asset is directly correlated with its scarcity. Investigations have shown that at least 80 digital assets with “Bitcoin” in their names exist solely to defraud BTC investors.
As a result, the price increase of genuine Bitcoin is negatively impacted by investors purchasing fake Bitcoin assets.
Self-custody turns out to be the most effective way to decrease reliance on cryptocurrency exchanges and business “Paper Bitcoin” contracts and preserve Bitcoin’s status as reliable money.
In related developments, El Salvador’s President Nayib Bukele declared intentions to begin buying one bitcoin every day on November 17, 2022.
Currently, El Salvador has 2,381 BTC, with an average purchase price of $43,357, according to the information that is currently available. However, because of the cryptocurrency’s underwhelming performance, the nation had a chance to considerably cut its average price of Bitcoin acquisition.