Bitcoin is similar to gold in several ways. Like gold, they cannot be created in an arbitrary way.
In fact, only 21 million bitcoins can exist on this planet. Once miners reach that number, the world’s supply will essentially be depleted, unless the bitcoin protocol is changed to allow more supply.
With the first 18 million bitcoins mined in just a decade, and with just 3 million more coins to go, it may seem like the final number is not too far away. True, but only in a certain sense. The BTC network is more complicated than that.
BTC mining awards
The BTC mining process that rewards miners with bitcoin pieces upon successful verification of a block adapts over time. When Bitcoin was first launched, the reward was 50 BTCs. A few years later, in 2012, it halved to 25 BTCs. In 2016, it again halved to 12.5 BTCs.
In 2020, the reward will again decrease to 6.25 BTC. It will continue to halve every four years or so until the final bitcoin is mined. This means that the reward for miners is getting smaller and smaller over time, and it also takes longer to reach the final bitcoin than it seems based on the pace so far. In reality, it is unlikely that the final bitcoin will be mined before around 2140, unless the bitcoin network protocol is changed by then.
Effects of Bitcoin over offer on Bitcoin miners
It may seem that the group of people most directly affected by the bitcoin supply limit will be the bitcoin miners themselves. On the one hand, there are critics of the protocol who say that miners will be forced to withdraw from the overall rewards they receive for their work once the supply of bitcoins reaches $ 21 million in circulation.
Without the incentive provided by a bitcoin price at the end of a rigorous and costly mining process, miners will not be forced to continue supporting the network. Because mining is not only a process by which new tokens are introduced into the ecosystem, but above all it is the way in which the decentralized blockchain is taken care of and maintained in the absence of a central bank or another single authority, if the miners give up their work the network will probably move towards centralization or will collapse completely.
Even when the latest bitcoin has been produced, miners will likely continue to participate actively and competitively and to validate new transactions. The reason is that each bitcoin transaction is associated with small transaction fees. These fees, although they now represent a few hundred dollars per block, could potentially reach several thousand dollars or more per block as the number of transactions on the blockchain increases and the price of bitcoin increases. Ultimately, it will operate as a closed economy where transaction costs are valued like taxes.
However, it should be noted that it will take well over 100 years before the bitcoin network mines its last token. It is also important to note that the bitcoin network itself is likely to change considerably by then.
Given what has happened to bitcoin in just a decade, hard forks, new protocols, new methods of recording and processing transactions, and a number of other factors can impact the process. extraction.
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