Run the Numbers #17: Bitcoin Year-End Review

Bitcoin & Data Science

2020.12.26

As we get ready to kick off 2021, I wanted to take an opportunity to recap on the events in Bitcoin over the past year, and what a year its been. The COVID pandemic and subsequent government lockdowns, fiscal and monetary reactions have created a vacuum for which Bitcoin is rapidly filling due to its perfectly scarce, uncorruptible nature.

Source: tradingview.com

Since last week, the price has risen another 20% to $27,000 with no top in sight. As mentioned above, part of the government response to COVID-19 – whether you agree with it or not – was to create trillions of new dollars out of thin air. The chart below shows the total amount of M1 US Dollar Base Money in circulation. In 2020 the Fed brought the total M1 supply from $4 Trillion to nearly $18 Trillion, pictured below.

Source: tradingview.com

In stark contrast, the total supply of Bitcoin (21 million) was known even before the launch of the network in January 2009. It has never been changed and will never change (unless the entire network agrees to change it). This is the type of monetary environment which Bitcoin was designed for. It is an opt-out of the entire rigged system where a few unelected people decide how much money should exist, of which everyone else has a stake in. When more total money is created, money holders get diluted as their percentage of the total amount decreases, and therefore their purchasing power decreases. Politics aside, the monetary policies of 2020 have truly highlighted the need for hard assets like Bitcoin.

Also in 2020 we saw the Taproot soft fork code implemented and are now beginning to discuss a path to activate it on the network. On a lighter note, Website 99bitcoins.com tracks “Bitcoin Obituaries” – public figures declaring that Bitcoin is dead. 2020 only saw 14 notable declarations of the end of Bitcoin, down from 41 in 2019.

Bitcoin Obituaries:

2010: 1
2011: 6
2012: 1
2013: 17
2014: 29
2015: 39
2016: 28
2017: 124
2018: 93
2019: 41
2020: 14

Source: 99bitcoins.com

As we look to 2021, the future of Bitcoin looks bright. The Bitcoin network maintains its 99.99% uptime, hashrate is rising as new miners come online, the price is making all time highs, and we hopefully will activate Taproot which will allow many new features in CoinJoin privacy, scaling techniques, and the Lightning Network.