It has been a while since Bitcoin, the world’s first decentralized digital currency, gained widespread attention and popularity. Bitcoin’s pre-set limit of 21 million coins is one of its distinctive characteristics. The 21 million Bitcoins will eventually be mined out, and no more will be created.
Curious to know? Continue to read with us as we explore what happens when all Bitcoins have been mined and how it will impact the future of the Bitcoin network.
The Mining Process
Before we dive into the consequences of all Bitcoins being mined, it’s essential to understand the mining process.
The procedure of forming new blocks and totaling them to the Bitcoin blockchain, the record of all Bitcoin transactions, is called Bitcoin mining. By utilizing powerful computer equipment to solve complex mathematical problems, miners compete to be the first to add a block to the blockchain, where they are rewarded with newly minted bitcoins.
The Reward Halving
One of the most significant events that will happen as we approach the 21 million coin limit is the reward halving. The reward for mining a block of Bitcoins is currently 12.5 coins, but it is to decrease by half every 210,000 blocks, which is approximately every four years.
The next share out is anticipated to occur in 2024, and the reward will decrease to 6.25 coins. This development will carry on until the reward reaches zero and all 21 million Bitcoins have been mined.
Transaction Fees as the Main Revenue for Miners
As the reward for mining new blocks decreases, transaction fees will come to be the main foundation of income for miners.
To encourage miners to include a specific transaction in the next block, users can include a fee with their Bitcoin transactions. As the source of new Bitcoins decreases, the demand for contract processing will increase, and so will the fees. This means that as the mining reward approaches zero, the cost of using the Bitcoin network will likely increase.
Impact on the Value of Bitcoin
Among the key factors driving Bitcoin’s value is its finite supply. As the supply approaches its limit, the demand for Bitcoins is likely to increase, which could drive up the price. Nevertheless, it’s imperative to note that forecasting the future value of Bitcoin is difficult and uncertain. Many factors, including market sentiment, global economic conditions, and regulatory changes, influence the value of Bitcoin.
The approaching limit of 21 million Bitcoins is an important event in the history of the Bitcoin network. As the supply of new Bitcoins decreases, the mining reward will decrease, and transaction fees will become the primary source of revenue for miners. This could lead to an increase in the cost of using the Bitcoin network, and it’s likely to have an impact on the value of Bitcoin.