This is what Bitcoin looked like in late 2010. Bitcoin’s invention by Satoshi Nakamoto ushered in a new beginning for the world of decentralised transactions. It was created with an admirable vision, but it wasn’t without its flaws. There are many platforms like this trading app that are helping many successful bitcoin traders to do safe bitcoin trading.
The Bitcoin white paper – which outlined all of Bitcoin’s technical specifications and measures for accountability – stated that there would only ever be 21 million bitcoins in circulation [Informative statement to establish Bitcoin cap] and that there wouldn’t be any more generated after 2040.
But while Satoshi Nakamoto had a lot of respect from within the community, not everyone praised him. In an interesting BitcoinTalk forum post in 2010, one commenter with the username “MysteryMiner” said, “We are all Satoshi.”
Recently, Bitcoin’s value has soared high above $5,000. With Bitcoin now worth so much money – and the Bitcoin community still in its relative infancy – people are left asking themselves: What happens when all 21 million bitcoins have been mined?
While Bitcoin is decentralised, it does require some specialised computer equipment to do Bitcoin mining. Without miners confirming transactions by checking them against the public ledger of past transactions known as the blockchain, Bitcoin doesn’t function properly. The blockchain records show whether or not there is double-spending (when someone tries to spend the same Bitcoin more than once) or any kind of fraudulent activity on Bitcoin’s network.
And that’s where Bitcoin miners come in, to ensure there is no double-spending and Bitcoin transactions are properly authenticated. They do this by putting Bitcoin transactions into blocks, then continuously attempting to seal off the block with a cryptographic puzzle based on what’s known as proof-of-work. The first miner to solve each of these puzzles gets some newly created Bitcoins as a reward (this process is known as Bitcoin mining).
Every time someone successfully creates a hash, they get 25 new bitcoins – but this will happen less frequently over time because of how difficult it becomes to create hashes for each transaction on the blockchain
The proof-of-work process is the only way in which new bitcoins are created, and miners compete against each other to solve each block’s cryptographic puzzle first. While this doesn’t take much work to do, it gets increasingly difficult over time as more miners try to get in on the action. This ensures that no one individual or group can take control of the blockchain (unless they have greater than half of all mining power).
But what happens when all 21 million bitcoins are generated? Right now there are about 16.4 million bitcoins generated at present, but after 21 million bitcoins have been mined, who will generate the cryptocurrency?
Well, Bitcoin transactions are set to become increasingly less attractive for miners. Bitcoin mining is designed so that the more miners there are on the Bitcoin network, the harder it becomes to mine bitcoins. That’s because Bitcoin’s algorithm makes mining more difficult as more computers are added to Bitcoin’s decentralised network. This ensures that Bitcoin remains a security system even if not all of its users can be trusted.
At present, miners receive 25 bitcoins per block they mine, but that amount will fall by half sometime in 2020. This could make continuing Bitcoin mining very difficult unless bitcoin prices rise considerably in response.
So what will happen when all 21 million bitcoins have been mined? Some believe this could mark the end of traditional fiat currencies like dollars and euros. Bitcoin has already disrupted other marketplaces, including online payments, gold, and silver, so it makes sense that it could replace other currencies in the future.
If Bitcoin can be used to buy everyday items like groceries or gas, what happens when there are no bitcoins left to mine?
This is why Bitcoin’s algorithm was designed with a finite limit of 21 million bitcoins. Of course, those who believe Bitcoin will still hold purchasing power after all 21 million bitcoins have been mined will see this as an added bonus instead of a problem!
However, Bitcoin’s blockchain was also created to ensure that no single individual could control the Bitcoin network. Since Bitcoin is decentralised, it won’t be affected by what happens after all 21 million bitcoins are mined.
We’ll just have to wait and see what happens when Bitcoin mining comes to an end in 2140.