This is a very common question among miners, as one of the essential characteristics of bitcoin is that the coins are counted: 21 million. Once mined, what will happen?
When bitcoin was created 12 years ago, one of the reasons why it attracted so much attention is that, unlike any other crypto, it was born with a maximum number of available currencies.
In the case of bitcoin, that maximum number was 21 million coins. And, after 12 years of mining, a whopping 90% of these have already been removed from the blockchain network. Now there is the most difficult, but also the most beneficial.
Satoshi Nakamoto, the creator of bitcoin, kept the offer fixed so that bitcoin would remain valuable over time, and he succeeded. But now that there are only a limited number of coins left to mine, there are questions about what will happen to the Bitcoin economy when supply runs out.
Satoshi put a hard cap or maximum limit of 21 million on the offer of bitcoins, regulating it through an algorithm in its source code. The limited offer made it a scarce good, as we have explained before, so it could help to increase its price in the future (as with gold).
To make it easier to visualize, Every 10 minutes a new bitcoin is currently on the market. But nevertheless, the algorithm is such that new bitcoins are cut in half every four years. In other words, it will be increasingly difficult to mine.
Some 19 million bitcoins have been minted, so only 2 million remain and experts predict that the remaining bitcoins will be mined by the year 2140.
This will clearly affect the miners. Miners are an integral part in creating bitcoin tokens; They solve cryptographic puzzles to verify and validate a block of transactions on the network.
And, for playing their role on the network, miners earn rewards that include freshly minted bitcoin and accumulated transaction fees paid. On average this year to solve a bitcoin, a miner paid $ 50,000.
The only hurdle for miners is that the block reward is also cut roughly in half every four years. In 2012, it was halved, to 25 bitcoins, and dropped to 12.5 in 2016. By May 2020, miners could earn 6.25 bitcoins for every new block.
And since the rewards are cut in half every four years, the price of the operation will eventually outweigh the rewards for the miners. This could make mining an unsustainable business model for them.
Will this affect the network? The most vital aspect of bitcoin is the network. The distributed ledger model is the heart of any cryptocurrency. If the number of transactions increases on the network in the future, there is a possibility that the speed of the transactions will decrease.
Bitcoin architecture favors accuracy and integrity over speed. If the number of transactions decreases on the network, there is a chance that bitcoin will become a reserve asset.
This drive out small retailers and replace them with large institutional players, which will possibly increase transaction fees and make operations more expensive.
Will this affect the currency and its value? The shortage of bitcoins will likely lead to more buying. As the FOMO (fear of missing something) sets in, there could be a race to buy all the assets and people who have bitcoins will be in a great position to sell.
However, there is also an expectation that potential regulations will help maintain the volatility cap. Hence, the future of the currency remains a mystery.