What Will Happen When There Are No More Bitcoins to Mine?

There are several cryptocurrencies, but since its inception in 2009, Bitcoin remains dominant. After existing for 11 years in the finance and tech space and cryptocurrency market, many individuals and institutions are beginning to explore Bitcoin’s innovative and ingenious functions.

Bitcoin is often compared to gold, as both have certain similar features. For example, gold and Bitcoin have a monetary feature and used as a store of value. Many market-savvy investors see the two, gold and crypto, as alternative investments. Although both are different, both can easily be verified. Among the similarities is that they both are in limited supply, and both are acquired through mining.

Bitcoin Mining 101

Gold, silver, and platinum are precious metals that are mined in the conventional method. Bitcoin is generated through mining as well, albeit digital. Bitcoin mining is a process carried out by individuals known as “Bitcoin miners.” Using high-powered computers and specially designed software, these individuals secure the whole network and process transactions.

Conventional miners break rock to get at the valuable metal. To get their rewards, Bitcoin miners crack incredibly complex mathematical equations. While precious metals are hidden in the rock, Bitcoin is hidden in data blocks. These data blocks are mined using an algorithm initially developed by Satoshi Nakamoto, a pseudonym used by the creator.

The Supply of Bitcoin is Fixed

There are certain similarities in the acquisition process of precious metals and Bitcoin. Both metals and Bitcoin are also scarce assets, both being of limited supply. Although the actual quantity of precious metals is not known, it is known that there are only 21 million Bitcoins.

As of early August, Bitcoin is selling at roughly $11,600 and has a market cap of $216 billion U.S.D. Of the 21 million Bitcoin’s in existence, a little over 18.2 million are in circulation. With only 2.7 million left before the supply of Bitcoin is exhausted, what will happen when all 21 million are gone?

Once miners have generated all available Bitcoins, that is the end of it. There will be no more available for mining. The only way the number of Bitcoins can be increased is if the existing protocol is altered, allowing for more, otherwise, the cap of 21 million stays.

The Impact on Bitcoin Miners

There are two rewards miners get from their activity. One is a portion of Bitcoin for every block that is confirmed, and the other is incentives derived from transaction fees. Higher fees provide miners the opportunity to gain higher incentives.

Once all 21 million Bitcoins have been mined, miners will no longer receive block awards. Miners will, however, earn from the transaction fees which are collected from all confirmed transactions. Miners have the option of securing the network as they can continue to earn from the fees. The problem, however, is whether the reward be enough for miners to provide sufficient resources for them?

The Impact on Market Price and Investment

As mentioned, there is about 2.7 million Bitcoin available for mining activities. Once these coins have been generated, the supply will become scarce, as is true in all commodities. As the supply tightens, the price increases.

This is good news for investors. As it stands at the moment, Bitcoin is highly volatile with wild price gains and falls within any 24-hour trading period.

When Will Bitcoin hit 21 million?

It can be tricky to answer this question. Some people believe that as long as Bitcoin’s mining power remains the same as when the initial block was mined, it may be as late as October 2040 before the last Bitcoin is mined.