This week marked a significant milestone for cryptocurrency giant Bitcoin as it was announced that 80% of the Bitcoin supply (some 16.8 million individual bitcoins (BTC)) had been mined. This means that there are only 4.2 million bitcoins available to be mined before the entire supply of the digital currency has been exhausted.
The 21 million Bitcoin cap was built into its original protocol by founder and developer Satoshi Nakamoto. It was mentioned in the companyâs White Paper from 2008 and was included as a way of introducing an enforced scarcity into a digital commodity. Itâs a fundamental rule of trading that scarcity generates demand, and demand makes a given commodity more valuable. When all the networkâs Bitcoins have been mined, obtaining them will be even more difficult, a state of affairs that will likely increase the value of each coin even more.
Bitcoin miners receive a reward of 12.5 BTC every time that they successfully mine a block, with this reward being halved every time 210,000 blocks have been mined in full. At current rates, this takes about four years, with the next halving of miner rewards predicted to take place in mid-2020, at which point the per-block reward will be reduced to 6.25 BTC.
Current estimates suggest that the final Bitcoin of 21 million will be successfully mined around 2140. Once this line is crossed, it is unclear how the cryptocurrency would continue to thrive, since the only income available to miners would be what they receive from transaction fees, with no potential for earning fresh coins from mining blocks.
Of course, once Bitcoin hits its full capacity, there will be significantly less than 21 million coins in circulation. If users lose their private keys, or their hardware wallets, they lose all access to their Bitcoins and, once that happens, those coins cannot be recovered and are permanently out of circulation, thus driving scarcity further.
Image Source: Flickr