Published on March 28th, 2020 | by Sunit Nandi0
Can All The Bitcoin Be Mined? What Happens If It Is?
When Bitcoin was introduced the very first thing that happened was there was a hard limit on how much could be made. The cap was set at 21 million coins.
There were two prevailing reasons for this. One was that it was thought that the coins would eventually align themselves with traditional fiat at some point. A bigger benefit, however, is how resistant it is to inflation.
Fiat currency can be printed in what is called Quantitative Easing. This lowers the value of the money as there is simply more of it. When it is limited, and more can’t be created, then it doesn’t inflate.
Think of it like gold, only we know how much is left unmined. Gold is finite, but the difference is that we don’t know how much is still out there.
How it is mined
To create a coin, miners use a special software that makes a calculation to solve a math problem. Solving this problem is what encrypts the block that a transaction is registered into.
There is also the issue of maintaining the blockchain and monitoring it for possible problems. In exchange for all of these things, Bitcoin is released. This process is an incentive for people to want to work on the blockchain to legitimize it. These miners and Bitcoin robots listed here are all over the world and contribute to the decentralized nature of Bitcoin.
Once the Bitcoin is mined, the miners usually transfer it to a bitcoin wallet online.
What happens if they are all mined?
Unless there is a major change in protocol, those 21 million coins will be exhausted and the miners will likely shift to other duties.
There will still be transactions that need to be verified but how will the miners be paid if there are not more coins to mine? There will likely still be fees paid, but how much is up for debate. It could add to the transaction costs for using Bitcoin since the reward for closing a block will probably have to come from the transaction itself.
How will it affect the market? The most likely scenario will be a big increase in the value of the coin. There has been a limit on how many can be mined, but as of right now the number of Bitcoins coming online is still happening. When they are all in the market, then the real scarcity actually begins.
This may lead to a lower rate of volatility and big booms and busts may not happen anymore. It could be a good way to invest for people that were hesitant before.
When will they all be mined?
Nobody can really say for sure. It could be in two years or it could be ten. It could even be more than that.
One thing is for sure, we are closer to the end game than we were before. If you are looking to buy them, then this is a good time to begin studying the market.