End of mining:
What happens when all bitcoins are mined. → Coupit - BLOCKCHAIN-DRIVEN...
As you know, a total of 21 million bitcoins (Bitcoin) are available for mining, and when all of them are mined, no new ones will appear. This bitcoin is fundamentally different from national currencies — their money supply is constantly growing, because the government benefits from inflation. At the same time, it leads to currency devaluation, which means that in practice individuals and families become poorer. In the case of bitcoins, this does not happen, and, theoretically, they should only become more valuable over time, since the number of new tokens entering the system is constantly decreasing — and in addition, the total number is limited to 21 million. Approximately every four years, the number of bitcoins that are rewarded for mining the next block is halved: first it was 50 bitcoins, then 25, and then 12.5. in 2020, it will be 6.25 bitcoins. Thus, if governments constantly increase the money supply, the bitcoin algorithm acts in the opposite way, preventing inflation. In addition, at various times, various amounts in bitcoins became permanently unavailable for circulation — it is enough to throw away or destroy the old hard drive or flash drive with the wallet. Consequently, the actual pool of coins available for use is even smaller. Bitcoin mining. A brief overview of bitcoin mining is the calculation of hashes, that is, a computer is used to solve some complex mathematical problem. When it is resolved, another block of transactions is created and added to the blockchain. The blockchain is a public register of all bitcoin transactions, and every new transaction added is recorded in this register. By calculating hashes, it is determined which transaction is the highest priority, and if the miners stop doing their job, the network will stop working. What happens when all 21 million bitcoins are received? Stop if the system is working, because miners will no longer receive compensation for the closure of the units? The fact is that miners also receive commissions for processing transactions, and these revenues will not go anywhere. Bitcoin without mining At some point, probably around 2030, the last bitcoin will be mined, but this does not mean that the network will collapse. In addition to bonuses for calculating hashes, miners receive transaction processing fees. Currently, these fees are small, about a fraction of a percent, but as the fee for calculating new blocks decreases, the transaction processing fee is likely to grow-along with the cost of bitcoin. These fees should be maintained at a level that still gives miners motivation, so that although new bitcoins will stop appearing, bitcoin miners will still receive money. Of course, some will be forced out of the market (this is happening now): as bitcoin becomes more and more difficult to mine, miners have to use more and more efficient equipment to do this. It's about energy consumption — if you use insufficiently efficient equipment, the electricity bill may be such that the miner will be at a loss; the bitcoins produced simply will not cover the costs. The cost of bitcoin should (and will) continue to grow transaction processing Fees should be quite large, which means that the cost of bitcoin should grow — and, fortunately, this mechanism is partly built into bitcoin. As we have already said, the supply of traditional currencies is not limited in practice, and governments increase the money supply at their own discretion, while the value of each individual monetary unit, for example, the dollar, decreases. Imagine that the money supply is a giant pizza, and by increasing the money supply, you do not increase the pizza, but cut it into smaller and smaller pieces. As the government increases the money supply (i.e. cuts the pizza smaller and smaller), the value of money (the size of the slice) decreases. The growth of the money supply encourages investment, because companies and people have to spend money before it gets too cheap, so the government often deliberately makes us poorer. In the case of bitcoin, the money supply will grow until 2140, however, since this is a pre-described and therefore predictable process, it does not lead to the negative consequences described above. In July 2016, the premium for calculating the hash was reduced from 25 to 12.5 bitcoins. In the run-up to this event, the price of bitcoin has increased significantly, from about $450 to $750. The price growth stopped when the premium decreased, so we can assume that when the supply of new bitcoins halves again — probably in July 2020-the price of the cryptocurrency will jump again. The same thing should happen in another four years. Bitcoin in the (distant) future, as the value of bitcoin increases, so will the reward for processing transactions. However, in order for this growth to be sufficient when mining stops, the price of bitcoin must increase significantly, and the assumption that bitcoin can cost both $50,000 and $100,000 does not seem crazy. Like any other currency, bitcoin can be divided into smaller units, and the smallest of them is called Satoshi. You may recall that once a cent, a penny, or a penny was quite a large amount, but now, due to inflation, they have become much cheaper. In the case of bitcoin, the opposite scenario is possible — Satoshi can become the trading unit, and bitcoin will be used only for large settlements. Today, a Commission of 10 thousand Satoshi does not sound too tempting, but this may change in the future.
As you know, a total of 21 million bitcoins (Bitcoin) are available for mining, and when all of them are mined, no new ones will appear. This bitcoin is fundamentally different from national currencies — their money supply is constantly growing, because the government benefits from inflation. At the same time, it leads to currency devaluation, which means that in practice individuals and families become poorer. In the case of bitcoins, this does not happen, and, theoretically, they should only become more valuable over time, since the number of new tokens entering the system is constantly decreasing — and in addition, the total number is limited to 21 million. Approximately every four years, the number of bitcoins that are rewarded for mining the next block is halved: first it was 50 bitcoins, then 25, and then 12.5. in 2020, it will be 6.25 bitcoins. Thus, if governments constantly increase the money supply, the bitcoin algorithm acts in the opposite way, preventing inflation. In addition, at various times, various amounts in bitcoins became permanently unavailable for circulation — it is enough to throw away or destroy the old hard drive or flash drive with the wallet. Consequently, the actual pool of coins available for use is even smaller. Bitcoin mining. A brief overview of bitcoin mining is the calculation of hashes, that is, a computer is used to solve some complex mathematical problem. When it is resolved, another block of transactions is created and added to the blockchain. The blockchain is a public register of all bitcoin transactions, and every new transaction added is recorded in this register. By calculating hashes, it is determined which transaction is the highest priority, and if the miners stop doing their job, the network will stop working. What happens when all 21 million bitcoins are received? Stop if the system is working, because miners will no longer receive compensation for the closure of the units? The fact is that miners also receive commissions for processing transactions, and these revenues will not go anywhere. Bitcoin without mining At some point, probably around 2030, the last bitcoin will be mined, but this does not mean that the network will collapse. In addition to bonuses for calculating hashes, miners receive transaction processing fees. Currently, these fees are small, about a fraction of a percent, but as the fee for calculating new blocks decreases, the transaction processing fee is likely to grow-along with the cost of bitcoin. These fees should be maintained at a level that still gives miners motivation, so that although new bitcoins will stop appearing, bitcoin miners will still receive money. Of course, some will be forced out of the market (this is happening now): as bitcoin becomes more and more difficult to mine, miners have to use more and more efficient equipment to do this. It's about energy consumption — if you use insufficiently efficient equipment, the electricity bill may be such that the miner will be at a loss; the bitcoins produced simply will not cover the costs. The cost of bitcoin should (and will) continue to grow transaction processing Fees should be quite large, which means that the cost of bitcoin should grow — and, fortunately, this mechanism is partly built into bitcoin. As we have already said, the supply of traditional currencies is not limited in practice, and governments increase the money supply at their own discretion, while the value of each individual monetary unit, for example, the dollar, decreases. Imagine that the money supply is a giant pizza, and by increasing the money supply, you do not increase the pizza, but cut it into smaller and smaller pieces. As the government increases the money supply (i.e. cuts the pizza smaller and smaller), the value of money (the size of the slice) decreases. The growth of the money supply encourages investment, because companies and people have to spend money before it gets too cheap, so the government often deliberately makes us poorer. In the case of bitcoin, the money supply will grow until 2140, however, since this is a pre-described and therefore predictable process, it does not lead to the negative consequences described above. In July 2016, the premium for calculating the hash was reduced from 25 to 12.5 bitcoins. In the run-up to this event, the price of bitcoin has increased significantly, from about $450 to $750. The price growth stopped when the premium decreased, so we can assume that when the supply of new bitcoins halves again — probably in July 2020-the price of the cryptocurrency will jump again. The same thing should happen in another four years. Bitcoin in the (distant) future, as the value of bitcoin increases, so will the reward for processing transactions. However, in order for this growth to be sufficient when mining stops, the price of bitcoin must increase significantly, and the assumption that bitcoin can cost both $50,000 and $100,000 does not seem crazy. Like any other currency, bitcoin can be divided into smaller units, and the smallest of them is called Satoshi. You may recall that once a cent, a penny, or a penny was quite a large amount, but now, due to inflation, they have become much cheaper. In the case of bitcoin, the opposite scenario is possible — Satoshi can become the trading unit, and bitcoin will be used only for large settlements. Today, a Commission of 10 thousand Satoshi does not sound too tempting, but this may change in the future.
4 years ago