What are the possible scenarios when bitcoin runs out?
On December 13, Bitcoin reached 90% of the maximum supply, so what can happen after the supply of this cryptocurrency runs out?
Writer Mohab Qureshi says, article In his report on The Indian Express, a research conducted by Blockchain.com showed that out of the total supply of 21 million bitcoins, 18.89 million were already mined and traded in the market. This achievement comes about 12 years after the first block, consisting of 50 bitcoins, was mined on January 9, 2009.
To the uninitiated, the writer says, Bitcoin is one of the few cryptocurrencies with limited supply. The inventor of Bitcoin, Satoshi Nakamoto, has set the number of Bitcoin at 21 million, to make the cryptocurrency scarce and to control inflation that may arise from unlimited supply.
Before examining the implications of the Bitcoin cap of 21 million, it may be interesting to consider if it will reach that number.
It should be noted that the reward for mining bitcoins halves every 4 years, so when Nakamoto created bitcoins in 2008 the reward for confirming a transaction block was 50 bitcoins, dropping to 12.5 in 2016.
In May 2020, miners were earning 6.25 BTC for every new block, and by the end of 2024, miners are expected to earn 1.56 BTC just for checking the block of transactions. This process is called halving, and it will continue until the last bitcoins are mined.
The writer hinted that it may appear that the world’s most popular cryptocurrency is about to be exhausted, but Bitcoin’s halving schedules expect the remaining 10% supply to continue until February 2140, according to Blockchain.com.
Moreover, the total number of bitcoins is not available for distribution in the open market. Chain Analysis, an analytics company, revealed that about 3.7 million bitcoins have already been lost due to various reasons, including the loss of access to the private key. per person, death, etc.
As the supply of Bitcoin is nearing its limit, here are some notable implications for investors and the blockchain.
impact on mining
After the supply of 21 million is reached in circulation, bitcoin will become more scarce, miners will rely on transaction fees, rather than collective rewards, and miners will start reaping more transactions occurring on the blockchain than the mining profits themselves.
He states that Bitcoin is not just a cryptocurrency, the blockchain network processes transactions in a distributed ledger framework, so the technology has much more use cases than just a crypto asset.
Regardless of any future efforts to change the underlying Bitcoin technology, experts continue to speculate about the future once the cap is reached, and some analysts claim that the new technologies will likely help lower the cost of mining (Bitcoin mining requires high-powered computers that use electricity extensively), and that this will lead to Ultimately, it will bring more profits to miners.
Others suggest that bitcoin platforms will only be used for large, very high-value transactions, which will provide enough revenue to satisfy stakeholders, and currently the average fee per bitcoin transaction is $15.
He notes that these fees have been low, reaching $1.40 last year, meaning that the price could continue to rise in events such as the cryptocurrency crash. However, there is no guarantee that the cost of the mining process will remain high in the coming years.
The writer pointed to what Ankur Dube, investment manager at Jupiter Capital, told Indian Express, that even after all bitcoins are mined, cryptocurrency miners will still participate in the decentralized blockchain network because of the transaction fees they make on transactions. The focus at this time may shift from mining bitcoins to facilitating transactions, but the network as a whole will not suffer much.”
effect on price
Dobie believes that there is an inverse relationship between prices and the total supply of bitcoin, and says, “Investors can expect the price to rise, as the supply of bitcoin will decrease more, so it is exactly the opposite, when the supply decreases, prices move up instead of in the opposite direction.” .
Meanwhile, Hitch Malvia, founder of itsblockchain.com, found it difficult to predict what the price of Bitcoin will be after 120 years. He added that the price will depend on future demand and regulations, but one thing is certain. Bitcoin will become the scarcer asset in the world by then.