April was a busy month for Bitcoin
, as it hit a big milestone, when the 17millionth Bitcoin was mined. This means that there are just four million coins left to mine before the 21 million Bitcoin cap is then reached. That said, we should note that it will take a long, long time before this figure is reached, with reports today suggesting that nobody that is alive now will see this happening. This is because, if the protocol stays as it is, the Bitcoin cap will be reached in 2140, which is a huge 122 years from now.
So, just what will happen when the last Bitcoin has been mined. At the moment, miners are being encouraged to mine to get increasingly more valuable Bitcoin tokens as a reward, before the maximum supply has been reached. When this figure has been reached, despite there being no more coins to mine, transactions will still need to be validated and stored on blocks in the blockchain, which means that the miners can then benefit from the transaction fees.
Last year, scalability, block capacity and transaction costs started to become an issue. Segwit was introduced in 2010, which separates non-signature data from signature data of each transaction, which reduces transaction sizes. It also cancels out transaction malleability by removing signatures from transaction data, paving the way for lightning network integration.
The implementations that have been made by SegWit have been slow to be introduced, with huge exchanges like Coinbase
and Bitfinex only introducing them early this year. The official launch of SegWit also coincided with lower transaction fees.
We earlier mentioned the Lightning Network, which sets out to do what SegWit has aimed to do, but on a much grander scale. It will allow users to open up multiple payment channels from the Bitcoin blockchain. So, users will deposit their Bitcoin and make transactions, by transferring promise of ownership to each other. When they close the channel, the users will take their proportion of the sum, and the ownership of the amounts is recorded on the blockchain.
However, this has caused some questions for miners. When all of the coins have been mined, it will be the transaction fees that become the incentive for miners. However, if the Lightning Network has been fully integrated by this time, it is likely that there will be far fewer transactions being recorded daily, which in turn will affect the amount of money made.