BITCOIN miners reached a major milestone over the weekend because more than 80 per cent of the cryptocurrency has now been mined into circulation. But what will happen to bitcoin after it is all mined?
With less than 4.2 million tokens left to be mined, the hit cryptocurrency is only 20 percent away from reaching its hardwired 21 million token limit.
There are currently just over 16.8 million tokens in circulation and bitcoin opened on the markets at £9,887.28 ($13,619.03) today, according to CoinDesk.
Written directly into the bitcoin protocol, there is a 21 million limit on how many tokens can ever exist at any one point in time.
But CommerceBlock CEO Nicholas Gregory has said that when the limit is reached then the transaction costs and fees will be enough to keep the bitcoin network running.
In December he told Express.co.uk: “I’m not sure of an exact date, but essentially when the cap comes to an end it should be the transaction fees that will still keep the miners from mining and at the moment the fees are quite high anyway.
“I think bitcoin miners earn a large percentage of the money from the fees anyway, so it’s not rally seen as a problem.”
When Satoshi Nakamoto introduced bitcoin to the world in 2009, the goal of the capped supply was to limit the effects of inflation.
All current predictions suggest that miners are still decades away from reaching the cap, while the effort needed to successfully mine new bitcoin is getting harder by the day.
Long-term forecasts suggest that the bitcoin deadline will not be reached until May 2140.
Each bitcoin is mined from what is known as a block – a data set on the blockchain – which releases a handful of tokens each time it is successful broken down.
But the computer algorithms behind the blocks are getting harder to crack. It is a feature of the system that encouraged early adoption and now fights off inflation.
The current block reward is 12.5 bitcoin, but approximately avery 210,000 blocks the reward is cut in half. This will happen sometime in 2020.
The original mining reward stood at 50 tokens before it was halved to 25 and then 12.5. The next reward will only account for 6.25 tokens per block, thus making mining unprofitable.
The increasing difficulty is clear because all bitcoin were already mined by 2017, but between 2016 and 2017 only 7 per cent were released. Then from 2017 to 2018 only another 3 percent were mined, and next year this number is expected to be even lower.
Some experts have suggested that once the number of available tokens decreases, bitcoin’s price tag could go through the roof.
Jamie Redman, contributor to Bitcoin.com, said: “In most cases when an asset is limited and resources are harder to come by, the supply causes demand for the market.
“The supply of bitcoin shows a significant gap between how many there are and those who want to obtain some.
“A great majority of bitcoiners believe digital scarcity will make bitcoin more valuable over time, and with 16.8 million mined so far it will get harder.”
However, Mr Gregory said that there could still be millions of tokens out that are left unaccounted for.
He said: “There’s quite a lot that have been lost.
“Those mining bitcoin in the early days didn’t realise the stakes I think and then there’s the question of the people who invented bitcoin – known as Satoshi Nakamoto.
“There’s about one million bitcoin there that are locked up.”
Even if bitcoin were to theoretically hit the cap tomorrow, each token divides up to eight decimals into a smaller unit known as a Satoshi. This gives each bitcoin owner another 2.1 quadrillion crypto units they can use.
With this in mind, just 0.01 bitcoin is worth £98.73 ($136), at Monday’s opening price. If bitcoin prices continue to go up, trading lingo will focus on the use of Satoshis in real world situations.