What Will Be The Future Of Bitcoin After All 21 Million Are Mined?
The deadline for Bitcoin mining is set for 2140. What will be the result when all 21million bitcoins are mined? Read along to know more.
How Are Bitcoins And Gold Similar?
It is found that Bitcoin is like gold in many ways, where like gold, Bitcoin cannot simply be created arbitrarily. As gold must be mined out of the ground, Bitcoin must be mined via digital means. This is why linked with this process is the stipulation set forth by the founders of Bitcoin that like, gold must have a limited and finite supply.
In the world, there are only 21 million bitcoins that can be mined in total. While once miners have unlocked this many bitcoin’s the planet’s supply will essentially be tapped out unless bitcoin’s protocol that is changed to allow for a larger supply. Similarly, supporters of Bitcoin say that like gold, the fixed supply of currency implies that banks are kept in check and not allowed to arbitrarily issue fiduciary media. What then will happen when the global supply of Bitcoin reaches its limit? This is the subject of much debate amongst the followers and aficionados of all things cryptocurrency.
Bitcoin Mining Rewards
While the first 18 million or so Bitcoin mined was in just a decade since the launch of the Bitcoin network whereas with only three million more coins to go as it seems like we are in the final stages of Bitcoin mining. This is certainly true but only in a certain sense as it is true that the large majority of Bitcoin has already been mined with the timeline more complicated than that.
Here the Bitcoin mining process rewards miners with a chunk of Bitcoin upon successful verification of a block adapting overtime. as it was seen that when Bitcoin first launched the reward was 50 BTC. Whereas a few years later it halved to 25 BTC, and then to12.5 BTC. With miners receiving this reward as they are successful in their efforts.
It was found that sometime in or around 2020, the reward was again halved to 6.25 BTC and will continue to halve every four years or so until the final Bitcoin has been mined. All this sums up to that the reward for miners gets smaller and smaller overtime taking longer to reach the final Bitcoin unlikely to be mined until around the year 2140 unless the biotin network protocol is changed in between now and then. Successively Bitcoin mining process provides Bitcoin rewards to miners whereas the reward size is decreased periodically to control the circulation of new tokens.
Effects of Finite Bitcoin Supply on Bitcoin Miners
As it is observed, it may seem that the group of individuals is most directly affected by the limit of the Bitcoin supply as there will be the Bitcoin miners themselves as on one hand there are detractors of the protocol saying that miners will be forced away from the block rewards they receive for their work once the Bitcoin supply has reached 21million in circulation.
Whereas without the incentive provided by a prize of Bitcoin at the end of the rigorous and costly mining process, miners may not be driven to continue to support the network. While this could have disastrous effects for Bitcoin, because mining is not just a process by which new tokens are introduced into the ecosystem, firstly and foremost how the decentralized blockchain is supported and maintained absent a central bank or other single authority if the miners abandoned their work, the network will likely move toward centralization or collapse entirely.
Altogether even as the last Bitcoin has been produced, miners are likely continuing to actively and competitively participate and validate new transactions. The reason for this is that every Bitcoin transaction has a small transaction fee attached to it. This is where these fees today represent a few hundred dollars per block potentially rising to many thousands of dollars or more per block as the number of transactions on the blockchain grows and as the price of a Bitcoin rises ultimately it will function as a closed economy with transaction fees assessed much like taxes.
In this case, however, it’s worth noting that it will be well over 100 more years before the Bitcoin network mines its last token. Whereas actually as the year 2140 approaches miners will spend years receiving rewards that are just tiny portions of the final Bitcoin to be mined. This is where the dramatic decrease in reward size means that the mining process will shift entirely well before the 2140 deadline.
On the other hand, it is also important to keep in mind that the Bitcoin network itself is likely to change significantly between now and then. It is better to consider how much has happened to Bitcoin in just a decade, hard forks, new protocols, new methods of recording and processing transactions with any number of other factors impacting the mining process. It was found that even more generally at some point before 2140 Bitcoin may very well fall entirely out of favor essentially rendering moot the entire thought experiment about what happens after the last token is mined.