2) The supply is fixed at 21 million, but bitcoins themselves are not permanent. People die all the time without wills. People die with btc on a computer/flashdrive that no one knows about, they're gone. People don't make backups, their computer crashes, they're gone. You might think this is great, because now your btc are more valuable. But for a currency, it's not such a good thing, to have the supply eroding over time. Theoreticly, the amount of btc could eventually go to zero.
This issue keeps showing up every now and then... Well here's the thing: it doesn't matter how many (or how little) bitcoins there are in existence!The limit of 21 million bitcoins (or 2.1 quadrillion satoshis actually, with the current 8 decimal precision) is just an arbitrary number. Bitcoin is digital and therefore infinitely divisible. The 8 decimals are just a limitation in the current software, which can be increased if the need arises at some point in the future.
It doesn't matter if there are 11.6 million bitcoins in existence, or 400, or just 0.03, it's enough. Even if it goes to zero, literally, i.e. all current bitcoins would be magically destroyed, it's still not a problem as new (fractions of) bitcoins are always being mined.
By definition there is NO shortage of supply, period.
I never knew that Bitcoins could be divided further, thanks
I knew that the algorithm to find coins was implemented in software, but I guess I keep falling into the trap thinking that everything's hardcoded into the protocol. I still need to read the whitepaper >.>