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We all know Bitcoin’s supply is limited to 21 million coins. As of writing this (30th Oct 2023), 19,527,856.25 Bitcoins have already been mined. This leaves us with 1,472,143.75 Bitcoins that will be mined in the coming years. There won’t be any additional Bitcoins. This isn’t a design flaw. Instead, it is a feature that makes Bitcoin scarce and valuable.
Every hour, an average of 37.5 Bitcoins are mined — that’s approximately 900 Bitcoins each day. At this speed, it is estimated that all the Bitcoins will be mined by 2140. Have you ever wondered what happens when all the Bitcoins are mined? This blog is all about that. We will explore more about Bitcoin’s limitations, why it is imposed, and what will ultimately happen to Bitcoins in 2140. If that sounds exciting, let’s get going.
While there are a lot of theories speculating Satoshi Nakamoto’s reasons for limiting Bitcoin’s supply, it was done to make Bitcoin a deflationary asset.
Bitcoin shares a lot of traits with gold. It is coded such that there are only a finite number of coins to ever exist in the Bitcoin ecosystem. Moreover, just like gold, Bitcoin cannot be created randomly or at will. They need to be extracted through a process called Bitcoin Mining.
To mine Bitcoins, you need a high-performing computer that can solve extremely complex mathematical problems to find the target hash. The miner who successfully cracks the code receives a Bitcoin block reward — it is usually a small fraction of Bitcoins. The block reward is halved roughly every four years or after every 210,000 blocks have been mined.
A Bitcoin halving event cuts the block reward in half. Back in 2009, when Bitcoin was first introduced, each block reward was worth 50 BTC. After three consecutive halvings, with the last one in May 2020, the current Bitcoin block reward is 6.25 BTC. The next halving event is due in April 2024, after which the block rewards will again be halved to 3.125 BTC.
Bitcoin halving’s main purpose is to counteract inflation by making Bitcoins scarce and valuable. Limiting Bitcoin’s issuance over time will increase its price, considering the demand remains the same. As of today, Bitcoin’s inflation rate is less than 2%, and it is expected to decrease even further with upcoming halvings.
It is estimated that Bitcoin’s supply will be halted once the block height reaches 6,930,000 — that may happen around the year 2140.
Block height is simply the number of blocks that must be mined after the first block (Genesis block).
By 2140, the total number of Bitcoins that will be in circulation will be approximately 20,999,999.97690000.
To understand why only 21 million Bitcoins will exist, we will need to take a closer look at Bitcoin’s source code.
A Bitcoin can be divided into 8 decimals places. Its smallest amount is called one Satoshi — which is equivalent to 0.00000001 BTC. Any amount smaller than 1 Satoshi is rounded to 0. This means the smallest block reward will be 1 Satoshi or 0.00000001 BTC, and it is expected to be mined by 2140. After that, there will be no new Bitcoins added to the network.
Once Bitcoin reaches its maximum supply, which is slightly less than 21 million, no additional coins will be issued.
As of today, almost 19 million (approx. 90% of Bitcoin) have been mined since its inception in 2009. The pace at which new Bitcoins are issued has slowed down over time. A report from Messari, an independent research firm, concluded that mining was relatively quicker initially — half of the 21 million Bitcoins were already minded by late 2012. In 2021, the issuance slowed down even further, and less than half a million Bitcoins were mined the whole year. As per current estimates, the last Bitcoin will be issued by 2140.
Bitcoin reaching its maximum supply will affect everyone, from miners to investors and other stakeholders. Here are a few possible scenarios that are likely to unfold when all Bitcoins are issued:
Bitcoin’s price is directly proportional to its supply and demand. Over time, Bitcoin will get even more scarce when no new coins are generated despite an increase in demand. This means Bitcoin’s value will continue to soar due to its limited supply.
Learn more: What Determines the Price of Bitcoin?
As of now, miners are rewarded with newly generated Bitcoins for spending their computational resources in the mining process. However, once 21 million coins are issued, there won’t be any mining reward. Instead, miners will earn from transaction fees, which are paid by the users for verifying their transactions.
Learn more: How Do Bitcoin Transactions Work?
Miners help maintain the network’s sanctity by validating transactions through high-end computers capable of solving extremely complex mathematical problems. Once 21 million coins are issued, miners will continue to verify transactions and prevent double-spending attacks. This will not only ensure the Bitcoin network’s stability and security but also incentivize miners who keep it safe.
Many critics look at Bitcoin’s 21 million cap as a limitation. There are many discussions and debates within the community — while some suggest changes to the Bitcoin protocol, others want to add additional features to the network. Thus, if a majority of the community agrees on implementing a certain feature or changing Bitcoin’s algorithm, it could lead to a hard fork.
Due to advancements in technology and an increase in the use of renewable energy, Bitcoin mining may be efficient, cheaper, and highly profitable in the foreseeable future. Moreover, transaction fees may increase as more and more people start using Bitcoins for their daily transactions.
By 2140, Bitcoin would have evolved to be both a good store of value as well as a global currency ideal for day-to-day purchases. While it’s too early to predict Bitcoin’s future accurately, technological advancements and innovations in Blockchain are likely to impact Bitcoin and other cryptocurrencies.
Early adopters are likely to reap huge benefits from Bitcoin investments. It has grown by over 230% in just one decade since its inception. Bitcoin is bound to reach new heights over time. If you are a merchant, now is the right time to start accepting Bitcoin payments.
Sign up with Speed today to start accepting Bitcoin payments from anywhere, anytime. From payment links to dynamic QRs, our user-centric payment features will go a long way in helping you simplify your everyday transactions.
For consumers, it’s wise to convert all or some part of your fiat currency into Bitcoins — as a hedge against inflation or even for day-to-day purchases. Download Speed Wallet today to start transacting in Bitcoins for free.
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© 2024 by SPEED1 - FZCO (License Number: 33198)
