When Will the Last Bitcoin be Mined?
Have you ever wondered what will happen when bitcoin hits the 21M cap? Well, you are not alone. There have been a lot of speculations and rumors going round about bitcoin, including when it reaches its limit. When Bitcoin first came into the limelight, it was defined as a cryptocurrency that would not require any centralized party to work.
That still holds true. It also came with a limited supply, i. If you go to coinmarketcap. The website lists max supply as 21 million. Right now, the circulating supply of bitcoin is Just like how precious metals on earth are finite, so is the first decentralized cryptocurrency.
Limiting the max supply was necessary as, without it, the value of bitcoin would never shore to new heights. So, what will happen when bitcoin reaches the 21 million cap? Bitcoin is a decentralized cryptocurrency that has its blockchain. It is a shared public ledger where bitcoin acts as the fuel. When a user sends any amount of bitcoin to a receiver, a transaction is created. This transaction will then be broadcasted to the network, where each peer stores a copy of it in the database.
For the transaction to be successful, it needs to be mined into a block. Blockchain uses a distributed consensus system which relies on Proof-of-Work PoW.
It also means that transactions are added chronologically. Once the block is mined, the transactions are successfully confirmed on the network. However, miners need to spend computation power to confirm a transaction. This leads us to our next question, what is bitcoin mining? Bitcoin mining is the process of confirming or adding the transactions to the bitcoin ledger. The ledger is composed of blocks, and each block consists of multiple transactions.
The whole process of adding transactions to blockchain is known as bitcoin mining. However, it does have its own computation power requirement. Each miner needs to have computers that can process the computation difficulty associated with the block.
The consensus algorithm that oversees the whole process is known as Proof-of-Work PoW. It is effective in ensuring the proper working of the blockchain but is not energy efficient. Now that we have a basic understanding of bitcoin and bitcoin mining, we are now ready to answer the question.
With time, the blockchain block size and mining difficulty will increase. This will directly affect the miners. It also means that once the 21 million coin limit is reached, bitcoin miners will not be able to mine any more bitcoin.
When this happens, they need to rely heavily on the transaction fees only. These fees will be their only source for maintaining operations. This leads us to an interesting question. Will their operations be unprofitable?
After all, they will not be getting any block mining award. We can always argue that the bitcoin mining will decrease as miners will not mine bitcoin, and move to other cryptocurrencies. This can lead to a centralized network and other adverse effects. However, they can make a profit considering that the price of bitcoin is extremely high. Bitcoin price could see a substantial increase if all the 21 million coins are mined.
This is an obvious result of limited supply, and when there is no more bitcoin to mine, people will value it more compared to now. According to Cointelegraph , we will not be able to witness the event of the last bitcoin being mined.
According to their calculations, it will take until before the cap hits. Its years from now. There is no way we can predict or learn how bitcoin will be treated. Will it stay the king or other cryptocurrencies will take its place?
There is no way, anyone can know. The market demand and sentiment can only determine the bitcoin price at that moment. However, if you ask us, we would bet that bitcoin price will increase substantially. There is still more than years before the bitcoin cap hits. We have already seen a rollercoaster ride for bitcoin and there is no doubt that it is becoming hard to mine bitcoin as time goes. Without miners, it would not be possible to run the bitcoin blockchain.
The transactions fees have also not been kind to the miners as the change to the protocol reduced the transaction fees to normal. The solution was the removal of the non-signature data, resulting in the reduced block size.
Not only that, but Segwit also opened the path to lightning network integration. Source: Cointelegraph. The lightning network aims to offload the load from the main blockchain and further reduce lightning network.
Just like any other systems, there should be a proper incentive for bitcoin miners to continue. If there is no proper incentive, we will surely see a drop in bitcoin miners. However, it is too early to worry as the bitcoin 21M cap is still years away. By then, we hope that the bitcoin core developers fix the problem and create a stabilized incentive for bitcoin miners to continue.
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Bitcoin is like gold in many ways. Like gold, bitcoin cannot simply be created arbitrarily. Gold must be mined out of the ground, and bitcoin must be mined via digital means. Linked with this process is the stipulation set forth by the founders of bitcoin that, like gold, it must have a limited and finite supply. In fact, there are only 21 million bitcoins that can be mined in total. Once miners have unlocked this many bitcoins, the planet's supply will essentially be tapped out, unless bitcoin's protocol is changed to allow for a larger supply. Supporters of bitcoin say that, like gold, the fixed supply of the currency means that banks are kept in check and not allowed to arbitrarily issue fiduciary media.
This is Satoshi’s way of battling inflation
Bitcoin is a peer-to-peer digital currency that can be safely and instantly sent to any person in the world. This currency is like electronic money , which you can share with friends or use to pay for your purchases. Bitcoin is a currency unit of Bitcoin system. Physical bitcoins also exist, but, generally, bitcoin is just a number connected to the address. Physical bitcoins are just objects like coins with inbuilt number. The main article: Satoshi Nakamoto. Satoshi Nakamoto is the name used by the unknown person or persons who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin's original reference implementation.
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As a reward, these nodes receive bitcoins. My question is once the 21 million bitcoin cap is reached, doesn't that mean there's no incentive to validate transactions anymore?
Won't the whole network essentially cease to function? Miners who will no longer be mining, but will be validating transactions in the blockchain will earn transaction fees. What those fees amount to or are to be interpreted as are hypothetical at this point, but might be imagined to be a transaction cost that ensures the security of the ledger. If the transaction fees from miners are tl sufficient to maintain the security of the ledger, than the network will self-destruct.
Think about it, at that point who cares if mining is not profitable? All the mie power will come from small powerful low power usage devices that will cost pennies. Decentralization, all the mining and such that is going now is just baby steps for bitcoin or its replacementthe money flowing into bitcoin disguised as "profit" to miners is really just the world slowly building a monetary base to support the coin and development of the network.
Free-Market economics based on profit will evolve out of mine to profit into "mine to mine for the sake of keeping your savings secure", just like how we let banks charge us absurd interest on loans for the sake of making the transactions somewhat secure and keeping the money system "going" Bitcoin is star-trek level money, we need to reach global prosperity while minting the new monetary system into incentve. I don't think the 21 million cap will ever be 'reached'.
It will be approached, but fo is designed similarly to an asymptote. The rewards will just be halved indefinitely. The idea is the reward will increase in value with the deflation of bitcoin together with the accumulated transaction fees of the network. Podcast: We chat with Tthe League Hacking about all-nighters, cup stacking, and therapy dogs.
Listen. Home Questions Tags Users Unanswered. What happens when the 21 million cap is reached? Asked 6 years ago. Active 3 years, 9 months ago. Viewed 26k times. Timothy Deng Timothy Deng 1 1 gold badge 1 1 silver badge 6 6 bronze badges. People worried about the "end of bitcoin when it hits 21m" are very near-sighted.
The above is based on my view and basic understanding of economics Dre4dwolf Dre4dwolf 59 1 1 bronze badge. Xenos paradox is resolved, in this case, by the granularity of the number systems used for cryptography. That is not accurate. The reward is actually defined to drop to zero in finite time. WebSockets for fun and profit.