If you have read a bit about Bitcoin, then you will know that the supply of Bitcoin is limited to an overall cap of 21 million. This means that there will ever be only 21 million bitcoins. A fixed supply limit is expected to give anti-inflationary properties to Bitcoin.
As of now, about 18.99 million Bitcoin (BTC) have already been mined. And once all the remaining ones are mined, the number of coins in circulation will remain fixed at the 21 million level permanently. This upper limit on the BTC supply is fixed (and programmed into the source code of BTC) by its mysterious founder Satoshi Nakamoto.
If 18.99 million bitcoins out of a possible 21 million (which is about 90%) have already been mined, then does it mean that we are about to reach the upper limit soon?
And that is because the rate at which new BTC is mined is programmed to slow down over time.
The reward for mining each block of bitcoin halves every 210,000 blocks or about 4 years. When it started in 2009, the reward was 50 BTC per block. But after 3 halving events, the reward size has come down to just 6.25 bitcoin per block.
As per current estimates, the final or the 21 millionth bitcoin (or the last Bitcoin) will be mined around the year 2140, in October. So I think it is safe to say that no one currently alive will be there to see that day!
Read more – Bitcoin Price Crash History
Here is another interesting aspect to this.
Even when all the possible 21 million BTC are mined and no new coins can be further mined, still, the circulating supply of Bitcoin would be much lower. What this means is that in reality, a lot less bitcoin would be available for buying/selling/transactions. And that is because about 20% of all the coins mined to date are already ‘lost’. These have been ‘lost’ because the owners have lost their wallets, passwords, keys, etc. And technically, there is no way to claim these back. These are gone for the good. Imagine having a few Bitcoins in your wallet (and with BTC prices so high) and being unable to remember the password!
But coming back…
What will happen when the 21 million supply is reached?
I think that in a hundred years’ time when this happens (the year 2140 to be exact), transaction fees will play a bigger role than the mining incentives then. As mining returns reduce in later decades, the transaction fees might see a sustained uptick. It is also possible that Bitcoin’s price growth itself (as well as reducing energy costs) might still keep mining a profitable venture for the BTC miners or maybe in future, for the bitcoin robot.
Though controversial, it’s also possible that the reward mechanism and the protocol itself for Bitcoin might change closer to the end of the supply. This is not an easy thing to happen and has a very low but non-zero probability.
But can this hard limit of 21 Million Bitcoin be changed?
Bitcoin’s hard cap of 21 million is central to its anti-inflationary value proposition. Bitcoin is (at least by a few) considered to be a good store of value because it is extremely difficult to increase its supply. But in theory, changing this hard maximum upper limit is still possible. This would need a majority of Bitcoin participants to agree on this. But that would also decrease the value of existing Bitcoin these participants hold. And hence, this might be against their own interests.
So in a manner of speaking, it can be said that the 21 million limit is protected from future changes via the incentive system that is built into the code of the Bitcoin architecture. And if you do a deep study of the topic, you will acknowledge that Bitcoin’s scarcity is a major driver (apart from FOMO) for its growing value.
But still early days in the life of Bitcoin. And hence, it’s difficult to accurately predict the future of Bitcoin its incentive systems and more broadly, that of cryptocurrencies in general.
Also read – Should you invest in cryptocurrencies?
So now you know that for the time being, only about 21 million Bitcoins will ever be created. And of this only 10% more coins are yet to be mined. But this remaining 10% will be mined slowly (and become slower every 4th year) before finally the supply gets over by the year 2140.