Did you know that Bitcoin has a delivery limit of 21 million coins?
There is much speculation as to why Bitcoin creator Satoshi Nakamoto restricted the supply of Bitcoin. Most people believe that this was his approach to creating a hard electronic currency without inflation.
Regardless of the reasons, however, other pressing questions arise, such as: B. when all Bitcoin will be mined. Also, what will happen to Bitcoin miners when this happens?
Why is the supply of Bitcoin limited?
Bitcoin is similar to gold in at least many ways. Integrated into the source code is the condition that there must be a limited supply, which means that both Bitcoin and gold are limited resources. Because of this, only 21 million Bitcoin can ever be in circulation.
Like Bitcoin, Bitcoin cannot be created out of the blue. Extracting takes some work. The difference, of course, is that Bitcoins are computationally mined instead of being physically dug out of the earth.
All 21 million bitcoins have already been issued
Miners don’t “create” new bitcoins, even if it seems like it. In reality, Satoshi Nakamoto spent all 21 million bitcoins when he launched bitcoin in January 2009.
The real role of a miner is to secure the network and process Bitcoin transactions. Every 10 minutes a successful miner discovers a new block by solving a cryptographic puzzle and is allowed to add it to the Bitcoin blockchain.
Blocks work as ledgers and are filled with Bitcoin transactions waiting to be processed. Miners are automatically paid for this service in the form of fresh bitcoins and transaction fees.
When will all bitcoins be mined?
In announcing the release of Bitcoin V.0.1, Satoshi Nakamoto made a unilateral offer to anyone willing to fulfill their agreement to distribute it.
As long as miners follow the rules of bitcoin in securing the network and processing bitcoin transactions, they will be rewarded in the form of bitcoins and transaction fees.
The announcement of the release set the rate at which miners would receive bitcoins for their work and it stated that this rate would be cut in half every four years until all bitcoins were mined. In conclusion, it was determined that the reward system could be replaced by transaction fees once the supply of Bitcoin was depleted.
When Bitcoin started, miners received a reward of 50 Bitcoin for every new block discovered. This was halved to 25 bitcoins in 2012 and again to 12.5 bitcoins in 2016.
Starting in 2021, miners will receive 6.25 bitcoins for each new block. At this rate, this means that the last bitcoin will not be mined until around 2140.
What happens to miners when all bitcoins are mined?
Bitcoin’s limited supply coupled with the network’s reliance on miners affects most Bitcoin users and enthusiasts. This is mainly because the main incentive for miners to act as verification nodes is the bitcoin rewards.
Satoshi already provided a solution to the problem in the Bitcoin announcement. As mentioned earlier, the rewards system could be replaced by transaction fees once the delivery is dry.
Switch to chargeable rewards for Bitcoin transaction fees
Even if Bitcoin’s supply is limited, miners will still have an incentive to support the network long after the supply ends. Miners are already collecting rewards in the form of transaction fees as well as bitcoins.
Currently, transaction fees only make up about 6% of a miner’s income. However, the return on transaction fees is expected to grow exponentially before the Bitcoin network hits its supply limit.
Miner’s incentive to support the network will most likely slowly shift towards transaction fees before the last bitcoin is mined.
Will Bitcoin Survive After The Last Coin Is Mined?
Unfortunately, the year 2140 is too far in the future for many of us that we will never know what will happen the moment the last bitcoin is mined. Given the proactive and passionate Bitcoin community, you can imagine that a strong replacement will already be in place, most likely in the form of a revised transaction fee process like the one above.
What is bitcoin, how is it worth so much, and how can you spend it?
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About the author
(10 articles published)
Toin is an undergraduate student specializing in English, French, and Spanish with a minor in cultural studies. Mixing his passion for languages and literature with his love of technology, he uses his skills to write about technology, games, and raise awareness about privacy and security.
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