You may have heard that Bitcoin has a limited supply. We’re still not there yet, but the underlying algorithm is programmed in a way to limit the supply of bitcoins to 21 million tokens. This up and coming artificial scarcity is one of the factors that propelled the price of Bitcoin in the past few years, and will likely be helping Bitcoin keep growing in the years ahead.
The Bitcoin protocol is set to reach this threshold at some point in 2140, and some people have been wondering what comes next? Here we discuss potential hurdles and solutions…
What will happen to Bitcoin miners?
This is one of the most frequently asked questions – what will happen with miners once Bitcoin reaches the 21 million threshold. At that moment, they won’t be rewarded with bitcoins for every transaction block, so will they keep the network alive? After all, we still need them to confirm all transactions in the blockchain.
Some of them may decide to stop doing their work, which is fine — there is a sufficient number of miners to keep the network alive. Or they could ask for higher transaction fees that would pay for their costs such as electricity for all the CPU/GPU usage. It is unclear whether transaction fees alone can pay for this work, though.
Alternatively, the mining itself could become less energy intensive with new CPUs and GPUs hitting the market, delivering increased performance at a fraction of the cost. Overall, the price of technology is going down with the day, and when the last bitcoin is issued, mining may require computing power that is available in (at that time) lower-cost computers.
Also, banks may find this to be an appealing process for them, to once again get control over financial transactions, though we are hoping something like that won’t happen.
Or perhaps some multilateral body gets formed by a number of countries and/or major companies who have vested interest in Bitcoin and its future.
Price of Bitcoin
The laws of supply and demand work in Bitcoin’s favor when the 21 million threshold is reached. The moment the last bitcoin is mined, the price will undoubtedly go up — or so we and many other people from the industry think.
Also worth adding is that there are stockpiles of inactive coins held around the world, the largest supply of which belongs to the person or group who founded Bitcoin – Satoshi Nakamoto. Chances are these inactive bitcoins will be used to “regulate” the market like it’s a “normal” fiat money. Some people even argue these coins have been intentionally put aside for a time when the global supply is facing increased levels of demand.
Future of Bitcoin?
Some people wonder: after the last bitcoin has been mined, will bitcoin die?
NO, we don’t think that will happen. Simply put, a large ecosystem has been formed around Bitcoin — including banks, VC firms and other businesses — which can’t afford to see it disappearing.
Also, Bitcoin’s use cases are nothing short of amazing, enabling for instance, people to affordable move money from one side of the globe to the other. We’re talking about remittances which are already benefiting from the Bitcoin Network and that market has just started to take advantage of low-cost cryptocurrency transactions.
In addition, Bitcoin enables individuals to escape capital controls while making offshore banking almost obsolete. Plus, some people (and companies) use Bitcoin to diversify their investment portfolio, and to “play” with it on the market.
Finally, it’s worth adding that Bitcoin is an open platform making it more resilient than many closed platforms.
To conclude – there is no reason to worry; if you want to buy bitcoins – do it. Just don’t say you did it because we’ve told you so — this article isn’t an investment advice, and we expressly disclaim any liability, including in respect of direct, indirect or consequential loss or damage. We had to add that. 😉