perhaps an economist with an understanding of money supply (and bitcoin) can best answer these questions…

If a fiat currency is destroyed, money could be printed to replace the lost supply. In the case of BTCs however, the number of BTCs that will ever be “printed” will, at most, be 21,000,000. Additionally, there exists no central authority that can decide to “print” more BTC because someone say, failed to care properly for their wallet.

So my question is, does it matter that nobody can ever be sure that BTC has been destroyed? Is this a drawback for BTC? The currency can be broken down to extremely small fractions, so there should be no worry of running out of BTC. However, the network can’t verify when BTCs are destroyed. Can the amount of BTC in circulation be tracked to any degree and then estimated? If not, is this a disadvantage inherent to bitcoins or does it not matter?

can someone destroy bitcoin?

In short, I don’t think it’s realistic even if technically possible.

One might argue that a person (or small conspiracy of people) might try to hoard/delete bitcoins in order to destroy the currency. Given that the quantity supplied of bitcoins is capped (by mathematical definition), one might imagine an attempt to buy it up and then delete it.

Let’s say a future multi-billionaire goes insane and tries to hoard all 21,000,000 bitcoins using his life savings. It’s not so easy. First, he would have to start bidding up the price. He must enter the market like anyone else but must offer the highest price – by far. Of course, he might succeed in buying a large percentage of bitcoins using the most attractive price. However, some sellers still won’t sell. Additionally, the currency can be broken down to the hundred millionths (i.e. make a transaction worth 0.00000001 BTC), so buying “enough” isn’t realistic either. Since the market won’t run out of money, an attempt to buy it all up will simply lead to massive losses on behalf of the buyer. A disincentive to even try is built in. This is why the rich man would have to be insane to make a go at it. It’s financial suicide.

A key factor that will determine the long-term viability of bitcoin will be supplier acceptance. If suppliers desire (and are permitted by governments) to accept bitcoin in exchange for goods and services, the currency has a future. It’s off to a good start in that regard, but broader acceptance needs to continue. The ability to pay one’s utilities for example, would be noteworthy progress.

5 interesting facts about bitcoin

I’ve been reading a little about Bitcoin lately. I installed the software, acquired some BTC (currency) by donation, and have tried mining. I think it’s an interesting project. Here are some facts about Bitcoin that caught my attention:

1. Bitcoin is available as free software and can run on GNU/Linux, a free software operating system. Therefore, publicly auditable source is available for a computer running Bitcoin and the software stack it runs on.

2. Bitcoin implements a peer-to-peer (p2p) architecture. It’s not easy for companies or governments to forcibly shut it down.

3. Though Bitcoin software is hard to shut down, governments and companies can choose to shun the BTC currency. For instance, Coinpal, a service to buy/sell BTC using Paypal was suspended. Apparently, Paypal accepted Coinpal for months and then put Coinpal out of business because it decided it was wrong to be involved in a “ecurrency” market. It didn’t appear that any reasons were forthcoming.

4. Quantity supplied of BTC is limited in a different way compared to a physical, nationalized currency. An algorithm to increase supply (“printing” through “mining”) of BTC is set and cannot be changed. Unlike currencies that are printed as deemed necessary by a central bank, Bitcoins are limited to 21,000,000. By the 2030s, BTC production will have slowed considerably.

5. Key pairs are used for trust between traders. Like a physical currency, BTC can be stolen or lost if the owner of the money is careless (i.e. they fail to encrypt/backup their wallet). The value in a wallet can be transferred to a newer wallet, in order to keep current in regard to security.

What else about Bitcoin/BTC is notable?