What happens when the 21 million Bitcoins are mined?

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The last Bitcoin is expected to be mined in 2140 (Source: Getty)

Currently, there are around 18.5 million Bitcoins worth around $ 80 billion based on the current BTC price of $ 43,500 per coin.

But what happens when the 21 million coins are released?

When Bitcoin was created in 2009, it was configured with certain protocols and rules. One of the most important rules was that there would be a cap of 21 million coins on the amount of Bitcoin that would come into circulation.

Bitcoin is currently released at the rate of 6 coins every 10 minutes. This coincides with a new block on the Bitcoin blockchain, which is also released every 10 minutes or so.

What is a Bitcoin block? Why are 6 Bitcoins created every 10 minutes?

Bitcoin can be viewed as a digital currency, while blockchain can be viewed as a digital ledger. It is a place where all Bitcoin buy and sell transactions are recorded and stored. The digital ledger is decentralized, which means it is not kept in a server or central location. Instead, identical copies of the ledger are stored on computers across the Bitcoin network.

By keeping identical copies of the ledger on many computers, it is almost impossible for anyone to defraud or hack Bitcoin, as every computer on the network would have to be accessed and tampered with. It is not known exactly how many computers are on the network, but the estimates run into the millions.

So who exactly records buy and sell transactions on this digital ledger called blockchain?

This is where people called Bitcoin miners come in. Miners have very powerful computers and compete to solve a mathematical problem that, when solved, gives that miner the right to write the next block of buy and sell transactions on the blockchain (aka digital ledger).

There are approximately 1,500 transactions on each block and a block is created every 10 minutes or so.

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So why do miners want to earn the right to confirm around 1,500 transactions and create the next block on the blockchain?

It is certainly not for fun. The reason is that they are rewarded with Bitcoin.

For every block created by a miner, that particular miner receives exactly 6.25 Bitcoins as a reward.

At the current price of Bitcoin, a lucky miner earns around $ 270,000 every 10 minutes by receiving 6.25 BTC which is created for him.

Sounds good, but being a miner is hard work. Not only do you need extremely powerful computers, a huge amount of electricity is consumed, not to mention the extremely high level of competition with other miners to earn the right to create the next block and receive the 6.25 BTC. and the award of $ 270,000.

This is how new Bitcoins are born. Simply put, they are created to reward people who support the network by writing buy and sell transactions on the digital ledger known as the blockchain.

When will all Bitcoins be mined?

Based on the current mining rate and Bitcoin rules that reduce mining benefits over time (they are halved every 4 years or so), analysts predict that the total allocation of 21 million Bitcoin will not will not be fulfilled until 2140, which is still quite a long way off.

Of the current 18.5 million Bitcoin, it is estimated that millions have been lost and will never be put into circulation. Indeed, the owners have lost the password linked to their Bitcoin holding (called the private key). Many early Bitcoin owners threw away their computers from years ago that held their Bitcoin holdings when the price of Bitcoin was low.

Others have kept the computer, but the hard drive has failed and they cannot recover their Bitcoin holdings. During this time, some have passed away and did not include their Bitcoin password in their will, and others unfortunately lost the piece of paper they wrote their Bitcoin password on.

With all of this in mind, given the limited supply of Bitcoin and the likelihood that a large amount of Bitcoin has been lost, some Bitcoin investors claim that the price of Bitcoin has a bright future as the supply is limited and grows only 6.25 pieces per year. 10 minutes.

However, demand can potentially continue to grow. But either way, we don’t have to worry about hitting the $ 21 million cap anytime soon.

James Gerrard is a financial advisor and co-founder of cryptocurrency investment research provider coincurrent.com.

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