What will happen when all 21 million BTC are minedNovember 24, 2021
Like gold, Bitcoin cannot simply be created arbitrarily. Gold must be extracted from gold mines on Earth. Bitcoins must be mined through highly configurable machines. The Bitcoin mining algorithm and process was created and predefined by the founder. Like gold, bitcoin has a finite supply.
In fact, only a total of 21 million Bitcoins can be mined. Once miners have unlocked this many bitcoins, the supply of the Bitcoin network will essentially be exhausted, unless bitcoin’s protocol is changed to allow for a larger increase in supply. Bitcoin advocates say that, like gold, a fixed supply of the currency means that banks are vetted and not allowed to arbitrarily issue fiduciary media. What happens when the global bitcoin supply reaches its limit? This is the subject of much debate among followers and fans of all things crypto.
Currently, about 18 million bitcoins have been mined, less than 3 million more waiting to be mined. To better understand what will happen to these remaining bitcoins and when and how the network will mine its final tokens, we will need to explore some details of the mining process itself. waterfall.
Bitcoin Mining Rewards
With the first 18 million bitcoins mined in just a decade since the bitcoin network launched, and only 3 million more to go, it seems like we are in the final stages of bitcoin mining. This is true, but only in a certain sense. While it is true that the majority of bitcoin has been mined, the timeline is more complicated than that.
After each Bitcoin Halving, the BTC reward for miners will be reduced by half. When bitcoin first launched, the reward was 50 BTC. A few years later, in 2012, it halved to 25 BTC. In 2016 it halved to 12.5 BTC. Miners now receive this reward when they succeed in their efforts.
When will you run out of Bitcoins?
Around 2020, the reward will be halved to 6.25 BTC. It will continue to halve every four years or so until the last bitcoin is mined. This means that the rewards for miners are getting smaller and smaller over time and also taking longer to reach the final bitcoin than it has been so far.
In fact, the last bitcoin is unlikely to be mined until around 2140, unless the bitcoin network protocol is changed sometime between now and then.
Thus, by 2140, the supply of Bitcoin will be almost exhausted. In fact, Bitcoin will never really be mined. Because the reward will continue to be divided gradually over time. You just try to take the current 12.5 BTC and halve it in a row to see if it ever reaches absolute zero? The number of BTC that has not been mined is only asymptote to zero, never zero.
Impact on Bitcoin Miners
It seems likely that the group of individuals most directly affected by the cap of the bitcoin supply will be the bitcoin miners themselves. On the one hand, there are detractors of the protocol who say that miners will be forced out of the block rewards they receive for their work once the bitcoin supply has reached 21 million in circulation.
Without the incentive provided by a bitcoin prize at the end of a rigorous and expensive mining process, miners may not be motivated to continue supporting the network. This will have catastrophic effects on bitcoin. Because mining is not only a process by which new tokens are introduced into the ecosystem, but first and foremost the way in which the decentralized blockchain is supported and maintained in the absence of a central bank or authority. The only other thing, if miners give up their networks will potentially move towards centralization or collapse altogether.
Even if bitcoin is eventually produced, miners will likely continue to actively participate and compete for and confirm new transactions. The reason is that every bitcoin transaction has a small transaction fee attached to it. These fees, while today represent several hundred dollars per block, can potentially add up to thousands of dollars or more per block as the number of transactions on the blockchain increases and as the price of bitcoin rises. Ultimately, it will act like a closed economy, where transaction fees are assessed like taxes.
However, it is worth noting that it will be more than 100 years before the bitcoin network mines its final token. In fact, when the year 2140, miners will spend years getting rewards that are actually only a tiny fraction of the final bitcoins mined. A significant reduction in reward size could mean that the mining process will change radically before the 2140 deadline.
It is also important to note that the bitcoin network is likely to change dramatically between now and then. Consider how much has happened to bitcoin in just a decade, hard forks, new protocols, new methods of recording and processing transactions, and any number of other factors that can affect the mining process. . Even in general, at some point before 2140 bitcoins are most likely going out of favor at all, essentially completing a whole-thought-out test of what happens after the last token is mined. waterfall.