The Last Bitcoin May 11 2018
The total number of Bitcoin that will ever exist is 21 million. A milestone was just passed when the 17 millionth Bitcoin was mined, meaning 80% of Bitcoin that will ever exist has already been mined. It only took miners a decade to mine the first 80% but it is projected that the last Bitcoin wont be mined for another 122 years. How does that work and what does it have to do with what will happen when the last Bitcoin is mined? Simply put, complexity, reward incentives and a lot. In earlier post, you learned that people run hardware that is rewarded in cryptocurrency, what we didn’t break down was the two different rewards that are earned. We talked a little about the first reward, which is for the solving the algorithm of a certain block. This is the actual process of mining or creating cryptocurrency. The larger the network of miners the faster the block can be solved, but instead of letting miners go work through the block chain quickly and mine all the crypto in a few years the complexity of the algorithms increases. This is why it’s going to take such a long time for the last Bitcoin to be mined. Like any product when it becomes harder to create the price is driven up and cryptocurrency is no different but halving the reward for breaking a block is what keeps the currency from hyper inflating. For example, lets say that a lot of miners got together and with all the computational power from their hardware they are able to breeze through blocks on the chain and they are rewarded 12.5 Bitcoin for each block they create, the blocks will become harder. It now takes longer for a block to be broken, more difficult to create drives the price higher; the price of the cryptocurrency goes up. The 12.5 Bitcoin that was being rewarded was worth $10,000 each but now that same 12.5 Bitcoin are worth $12,000 each, so the reward is halves to keep the currency from inflating. In fact, every 4 years the reward for mining a block is halved and we are due for a halving in 2020. This answers the first question, as to why the last Bitcoin wont be coming around any time soon but what about what happens when it does? Remember when I said that miners were rewarded in two ways, for breaking blocks, and for verifications. . With every Bitcoin transaction there is a fee attached and that fee is divided among miners who have mined the block containing the transaction. When the miners are no longer being rewarded for creating blocks on the chain because there are no more to be created, the transactions fees will be the only reward the miners are given. As of now the transaction fees are too small to offset the price of running the mining hardware, and without the hardware running there isn’t anything to verify transactions and cryptocurrencies die. In the next 122 years either the cost of hardware and the cost of running the hardware has to go down or transaction fees must go up. While most people alive now won’t be alive to see the last Bitcoin, complexity and reward incentives are changing rapidly to solve the problem of what happens when it does.
Here are a few articles on what will happen when the last Bitcoin is mined: