As you know, there are only 21 million BTC in Bitcoin blockchain. Once the miners have mined this amount of Bitcoin, the emission of coins will be completed, unless the protocol of the first cryptocurrency is changed of increasing this limit. Bitcoin proponents say that, like gold, a fixed supply of coins means no one can print more. This is a very good thing because, as we can see, the excessive emission of money leads to chaos, which we observe today in the traditional financial market. What happens when the global BTC supply reaches its limit? This remains a subject of controversy among cryptocurrency community.
Currently, about 18.5 million BTC have been mined, with about three million more to be distributed into circulation. To understand what will happen as the remaining coins are minedтwe need to deal directly with the mining process.
Despite the existence of only 21 million BTC, in fact, there are significantly fewer. This is due to people lose their private keys or die without leaving anyone with instructions on how to use their private keys.
If the first 18.5 million Bitcoin were mined in just ten years from the launch of the network, and there are only three million BTC left, it might seem like we are in the final stages of mining. This is true, but only in a certain sense. Most of Bitcoins have already been mined, but the time frame is more complex.
In the process of Bitcoin mining, participants in the process receive a portion of BTC as a reward upon successful block confirmation, which decreases over time. As the first cryptocurrency was launched, the reward was 50 BTC. A few years later, in 2012, it was halved to 25 BTC, then in 2016 – to 12.5 BTC. This year, on May 11, 2020, the reward was reduced to 6.25 BTC again – this is the amount that miners currently receive when they successfully search for blocks.
So, the reward will continue to halve every four years until the last Bitcoin is mined. Thus, it takes more time to mine the latest BTC than it might seem based on its rate. In fact, the last BTC is mined around the year 2140, unless the network protocol is changed before that time.
It might seem that the group of people most affected by the Bitcoin supply limitation are the miners themselves. There is a perception that without incentive, miners will not be able to continue to maintain the network, which will have disastrous consequences for Bitcoin, since mining is not just the process through which new tokens are introduced into the ecosystem, but above all, it is a way by which security is maintained decentralized blockchain in the absence of centralized authorities. If miners give up their work on the network, most likely, the cryptocurrency will move towards centralization or collapse completely.
Even when the last BTC is mined, miners will likely continue to actively and competitively participate and validate new transactions. The reason is that a small transaction fee is charged for every transaction on the Bitcoin network. These fees could potentially rise to many thousands of US dollars or more per block as the number of transactions on the blockchain grows and the price of BTC rises. Ultimately, it will function as a closed economy where transaction fees are paid in the same way as taxes.
However, that it will take another 100 years before the last block is mined on the Bitcoin network. In fact, as the year 2140 approaches, miners will spend years receiving rewards. A sharp decrease in the size of rewards could lead to a complete transformation of the mining process well before the deadline of 2140.
It’s also important to keep in mind that the network itself is likely to change significantly before that time. Considering how much has happened to Bitcoin in just ten years, hard forks, new protocols realizations, recording methods, transaction processing, and any other factors can affect the mining process. In other words, in a hundred years it may no longer be the Bitcoin that we know about.
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