Bitcoin 19 million milestone

Two days ago, the total supply of Bitcoin crossed the milestone of 19 million. As we all know, the total supply of Bitcoin is designed to be about 21 million. This means that in the past 13 years (2009-2022), more than 90.5% of Bitcoin has been mined and flowed into the market. Only 9.5% of Bitcoin will be mined in the next 118 years (2022-2140).

According to last year's data, there are already 100 million people holding Bitcoin in the world. That means each person holds less than one Bitcoin on average. How many millionaires are there in the world? More than 21 million.

Millionaires, also known as high net worth individuals, are defined as people with liquid assets of $1 million or more. Credit Suisse said there were 46.8 million millionaires in the world as of mid-2019. That number is twice as high as 21 million.

As for whether China has more or the United States has more, I have seen two completely opposite statements. One says that China had 4.4 million in 2019, surpassing the United States for the first time. The other [2] says that China has 4 million, but the United States has 19 million, far more than China. According to our intuition about power law distribution, the latter statement seems more reliable.

Under the background of global sanctions, the safe havens that used to be known for their contracts and neutrality no longer exist. These wealthy people are in urgent need of finding a safer, more reliable, and less conspicuous place to store their money, so they can withdraw it at any time without being blocked.

Apart from pancakes, I really can't think of anything more suitable for this rigid demand.

Although in the crypto world, Bitcoin, as a collateral asset, has played an important role as a ballast in various lending DeFi tools, in the real world, its acceptance as a collateral asset has just begun.

Microstrategy, the coin hoarder, has set a positive example. Some time ago, it borrowed $205 million from a bank called Silvergate[1]. The collateral used for this loan was Bitcoin, which was worth about $820 million. From this, it can be calculated that the over-collateralization rate was about 400%. However, it is unknown what the interest rate and liquidation price were.

The maximum amount of commercial housing mortgage loans in my country can reach 70% of the assessed value, which means that the excess mortgage rate only needs to be 143%, and the interest rate is the benchmark interest rate, which is about 5%. I don’t know if there will be fluctuations after the LPR.

Due to the high volatility of Bitcoin at this stage, it is obviously impossible to reduce the collateral ratio to as low as a house. For example, for MakerDAO, the collateral ratio for wBTC to trigger liquidation is 150%.

Generally speaking, when borrowing money by collateral in a bull market, one must take into account the unexpected turn from bull to bear market, and perform a stress test based on a minimum drop of 80% in the bear market. The excess collateral ratio should be set above 500% to be relatively safe.

However, for over-the-counter lending like Microstrategy, even if the price reaches the trigger liquidation, the collateral will not be confiscated immediately. Instead, a phone call will be made to negotiate, replenish the margin, or confiscate the collateral.

In any case, more and more financial institutions are able to accept Bitcoin as a collateral equivalent to real estate, which shows that Bitcoin's asset attributes have been increasingly recognized and the consensus on Bitcoin has been further strengthened.