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All Of The Bitcoin Will Eventually Be Mined And Here's What Will Happen

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All Of The Bitcoin Will Eventually Be Mined And Here's What Will Happen

With Elon Musk and Tesla's recent $1.5 billion investment into Bitcoin, it seems like the ascendant cryptocurrency is showing no signs of slowing down.

However, there is one question that's started circling within the Bitcoin community: what happens when it runs out?

To explain, due to a stipulation embedded in its source code, there will only ever be able to be 21 million bitcoins mined. That seems like quite a lot but in the past decade 18.5 million of bitcoins have already been mined and are in circulation, at a rough average of one block every 10 minutes. So you'd think that when they hit 21 million that's going to cause some issues.

However, it's a little more complicated than that (it's Bitcoin, of course it is). Firstly the rate of new bitcoin into circulation is halved every four years, so although blocks are introduced regularly the amount of bitcoin in them falls periodically.

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Credit: PA
Credit: PA

On its initial launch, for instance, a miner of bitcoin would gain a reward of 50 bitcoin for every block successfully verified. This was then cut by 50 percent in 2012 so that they'd receive 25 bitcoin, 12.5 in 2016 and then 6.25 last year.

This means that at its current rate the final bitcoin isn't expected to be mined until around 2140 - and that's a lot of time in which protocols around it could change and so a larger supply could become available.

Still, when the time eventually does come and all bitcoin has been mined, it seems like it'll be the miners who are affected the most as once there is no more to mine they'll be forced away due to the lack of rewards - or bitcoin - they would receive from mining a block.

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However, every transaction of bitcoin comes with a transaction fee attached to it, so although currency is finite, there is still value in the transaction of it. At the moment these fees are a few hundred dollars per block, but as the price of bitcoin itself rises so will the fees, working effectively like a closed economy.

It's worth keeping in mind too that, given the rewards for mining blocks of bitcoin will be decreasing every four years, it means the miners will be receiving a much smaller proportion of any block verified and so inevitably the whole nature of mining it will change.

Remember, too, Bitcoin has come from nowhere in the last decade to be talked about as a serious alternative to the more orthodox currencies we trade with on a day-by-day basis.

Given there's at least 100 years before bitcoin miners are likely to face the reality of its finite capacity, you can expect that new methods and new protocols will inevitably make the market unrecognisable to the one that's currently operating today.

Topics: Bitcoin, Technology

Simon Catling
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