What Happens to Bitcoin After All 21 Million Are Mined?
The popularity of Bitcoin continues to grow. Tech experts and pundits were optimistic about Bitcoin’s future growth a year and a half ago, but few expected it to take off in the way it did. It appears the trend may continue. Bitcoins have already been mined to the tune of 18.77 million. Then we are faced with a most perplexing question: what happens when all Bitcoins are mined?
It is important that everyone involved be aware that there are just over 2 million Bitcoins left. In this article, we will explain what happens when all of the remaining Bitcoins are mined.
Are there many Bitcoins left to mine?
The number of Bitcoins in circulation has increased to approximately 18.7 million, as of January 2022. This means only 2.13 million Bitcoins are left for mining.
In 2008, Bitcoin inventor Satoshi Nakamoto set a limit of 21 million coins for the virtual currency. A major reason for the Bitcoin supply cap was to ensure that there was no inflation. Like paper money, Bitcoins are intended for transactional use. Therefore, too many Bitcoins on the market can cause wild price swings.
In order to prevent future price fluctuations, the inventor capped the supply at 21 million Bitcoins.
For this reason, the Bitcoin code was designed in a way that only allows a fixed number of Bitcoins to be mined every year until the 21 million Bitcoin limit is reached.
What is halving?
The concept of halving was introduced by Satoshi Nakamoto to ensure the gradual flow of Bitcoins. Every three years and nine months, this mechanism reduces the number of Bitcoins available in circulation by half. By the end of 2078, almost all of the 21 million Bitcoins will have been mined. Therefore, it will not be possible to mine Bitcoins any longer.
Many people are confused about when the total Bitcoin supply will end. It is likely that the date of this event is listed as 2040 instead of 2078 if you search Google for the answer. This is partly because of informal studies that have concluded that halving is done every four years, instead of every three years and nine months.
How many Bitcoins are circulating?
As the Bitcoin mining end date nears, there are fewer and fewer blocks available to mine. Even so, it is important to realize that not all Bitcoins mined to date are in circulation, thereby further reducing the supply of Bitcoins available at any given moment. Bitcoin’s current supply doesn’t represent the total number of Bitcoins that have already been mined for a number of reasons.
The method of storing Bitcoin is one of the main reasons. Because Bitcoins are protected by wallets and passwords, no one can access them if their owner passes away without giving someone else the password. It is also possible for Bitcoin to become permanently inaccessible if its owners commit other errors. Bitcoins are unlike other assets: it’s almost impossible for anyone to retrieve them without the consent of the owner.
Nearly 20% of Bitcoins are trapped in inaccessible wallets, according to a recent study by the New York Times. There is an estimated value of $140 billion in these trapped Bitcoins. This will limit the number of Bitcoins in circulation because these Bitcoins will likely remain trapped. If you are ever asked how many Bitcoins are in circulation, the simple answer is 18.77 million, minus any Bitcoins trapped in unreachable wallets.
Taking into account that Bitcoin mining is nearing its limit, its value is expected to rise. In the case of Bitcoin remaining popular, the limited supply and investment value will tempt people to use it as an investment commodity rather than for transactional use.
Despite the reduction in reward per block, Bitcoin’s price has consistently risen, supporting this extrapolation. Instead of releasing Bitcoins, HODLers and retail investors will hoard them in their wallets. Such actions will further decrease Bitcoin’s supply, keeping the price high.
The crypto waters are being tested by a growing number of companies. Tesla, Morgan Stanley, Square, and many other brands already plan to adopt crypto over the long term. A growing interest in cryptocurrencies is expected to attract more institutional investors who will be eager to gain first-mover advantages if the interest continues to grow unabated.
In the future, institutional investors will use virtual currency like precious metals as a hedge against inflation due to its mining limit, scarcity, and potential price increase.
It has proven to be a double-edged sword for governments around the globe to deal with cryptocurrencies like Bitcoin. The world’s economies are keenly watching how Bitcoin impacts the world’s economy, despite many countries not accepting it as legal tender.
Policymakers are likely to prefer a middle ground to a take-it-or-leave-it approach. As governments adopt Bitcoin, they will attempt to regulate every aspect of its operation. Instead of waiting for what will happen when all Bitcoins have been mined, it’s likely that individual governments, including the U.S., will create their own versions of digital currencies to compete with Bitcoin.
The bottom line
Considering the popularity of Bitcoin, it can be safely assumed that it will continue to attract stakeholders even after it reaches its total supply. Bitcoin’s maximum number will not create a doomsday scenario unless it loses its demand and traction. A likely scenario is that the Bitcoin ecosystem will continue to adapt to the economy’s changing patterns, providing a stable outlook for the future of the network.